Women pay nearly £17,000 more to borrow over a lifetime

Financial inequality means women face higher costs for borrowing money across their lifetimes according to Credit Karma, which indicates that women have lower credit scores on average than men and are more likely to fall into the subprime category for lenders.

This research found that this gender inequality can make accessing financial products such as personal loans, credit cards and mortgages more difficult or expensive, as the free credit score provider calculates the cost of the gender credit gap at £16,913 across their lifetimes.

One of the biggest factors contributing to the gap in relationship dynamics: nearly a third (31%) of women has some or all of their financial agreements in their partner’s name. This limits their credit exposure, and leaves them with little or no credit rating, should their relationship end.

The research shows that women are more averse to credit too. They are significantly less likely to enter agreements that have a positive impact on their credit rating, including personal loans, credit cards and mortgages, instead of relying more heavily on unregulated forms of borrowing, such as buy-now, pay-later schemes, which have no positive credit score impact.

Credit Karma also anticipates that the gulf will widen as a result of the pandemic, as 20% of women report that they have been laid off or furloughed, compared to 14% of men, while women are also more likely to have seen their income diminished over the last year.

Akansha Nath, Head of Partnerships at Credit Karma said “The last year has been incredibly challenging for everyone, but it’s concerning to see that women face being affected disproportionately in the long-term. There is no reason that borrowing should be more expensive for women than their partners, but there are a number of simple solutions that can make them more appealing to lenders.”

Credit Karma’s research found that financial disengagement is more prevalent among women than men, with 41% of women reporting that they don’t know their credit score compared to 35% of men, and are encouraging women to take a more hands-on approach to managing their money.