The recent survey ‘Understanding the financial lives of UK adults’ conducted by the FCA stated that 9% of UK adults have been declined a product in the last 2 years. 49% of them were unable to get the product they needed and 51% associated the decline with their credit history. Another 19% were put off applying for a credit product as they thought their application would be rejected.
These statistics underpin our own findings from our adult money workshops in workplaces and with vulnerable groups. Our workshop attendees often highlight credit scoring as a key area of concern, second only to dealing with debt. It’s often not actually the credit scores that cause them stress, it’s a lack of understanding. They often tell us the myths and misinformation regarding credit referencing also make it difficult to feel in control. With 24% of adults having little or no confidence in managing their money* the complexity of managing their credit file contributes negatively to their overall financial wellbeing.
It’s commendable that many credit reference agencies and lenders have begun offering products to support consumers with being more in control and managing their credit file. We feel there is more work to do to put the consumer in control and provide information that is accessible to everyone.
Where individuals find dealing with money and credit challenging, or are digitally excluded, the information available is still quite daunting. The content can be quite lengthy and often makes use of industry jargon. The information is also often only available online and after registering for a product, free or paid for. The information provided frequently focuses on a company’s own credit score which consumers often mistake for the credit score their bank or lender may use to approve or decline their application. This often provides far more confusion, especially if consumers are obtaining information from multiple sources. Those people who have exceptionally low levels of financial capability, often the most vulnerable, may end up relying on inaccurate information or making poor financial decisions. They are also more susceptible to feeling pushed into decisions resulting from tactics used by some lenders to sell their products.
The Money Charity works with consumers through our workplace and not-for-profit money workshops. We help dispel myths about credit and help people achieve a better level of financial wellbeing. This often results in an improved understanding and feeling more in control. We call on lenders, credit reference agencies, employers, and community groups to work with us to provide access to clear, easy to understand information and support our work to help consumers who need that bit of additional support that they can’t get from a website or brochure.
*FCA Understanding the financial lives of UK adults, 2017