Millions of customers frozen out of credit

20th March 2017

More than three million people have been frozen out of credit in the past 12 months, despite mainstream lenders promising to increase access, according to new research.  Almost one in five people who applied for credit in the last 12 months – either a credit card, personal loan or mortgage – had their applications refused, with more than a million (40%) falling victim to a poor credit history.

The figures come from the ‘Britain’s Credit Blackout’ report from guarantor lender, Buddy Loans, which reveals the most common reasons people are being rejected for personal loans, credit cards and even mobile phone contracts.

 Highlights from the report include:

  • 3m Brits turned down for credit in the past 12 months
  • Credit blackout is disproportionately hitting women
  • 35-44 year-olds are most likely age-group to be refused credit
  • Poor credit history is the top reason applications are turned down

The survey of 1,000 UK adults found that one in five Brits (17%) is in a ‘catch-22’, being refused for having no previous history of borrowing. The report also found that women are being disproportionately affected, with nearly a quarter of men (23%) who applied for credit being accepted, versus just 16% of women.

Ex-partners are also causing financial turmoil for thousands of Brits, as one in ten people who applied (10%) have been turned down for credit because their history is linked with that of a former partner.

‘Generation X’, 35-44 year-olds, is the age group being hit hardest by the credit blackout, with more than a quarter (26%) of those who’ve applied for credit being turned down after applying. One in five people aged 18-24 and 45-54 have also had their applications turned down in the past 12 months.

The report aims to highlight the sweeping generalisations being made by maintream lenders, as people increasingly find themselves blocked from borrowing money following unexpected life events like redundancy, relationship break-downs, a cut in working hours or unexpected pregnancy.

Guy Mackenzie, director of Buddy Loans, which authored the report, said: “Having a poor credit history is not an automatic indictor that you can’t afford borrow money, so it’s disheartening to see that so many are being point-blank refused, often when they are most in need of a leg-up to get their finances back on track.

“While the industry has a responsibility to ensure people don’t take on debt that they can’t afford, it’s also important that those who can afford credit are able to make home improvements, buy a car or consolidate their existing lending.

“The research also shows the importance of understanding, and checking, your credit score, as it can have a big impact on your ability to borrow and the rates at which you can borrow.”