Over a third of women put off applying for credit after being turned down

8th March 2024

Women who have been rejected for a credit or loan application are significantly more likely than men to assume that “no means never” and struggle on without financial support, according to research by Fair4All Finance, the not-for-profit financial inclusion organisation.

Polling of 3,101 adults across the UK showed more than one in three women (36%) said they have been put off applying for credit because they had previously been turned down and thought it would happen again, whereas 30% of men felt the same.

The findings show how women are at risk of financial exclusion as a result of gender differences, which can heighten cost-of-living pressures and weaken financial resilience.

Three in ten (30%) female respondents said they have been put off from applying for credit based on the information available from the lender or price comparison website, whilst 24% of male respondents have been deterred in the same way.

Similarly, almost one in four (22%) women have been put off due to the lack of options available to them, compared with 18% of men.

Having been rejected for credit, women are more likely than men to make adjustments such as cutting back on essential spending (26% vs. 20%) or go without an item or service they need (26% vs. 16%).

Fair4All Finance’s data also shows that women are more likely to lean on family or friends for support. More than one in three women (34%) have borrowed from a family member or friend in the last 12 months after being turned down or put off applying for credit. This is significantly higher than the 22% of men who have done the same.

The fear of further rejection is especially concerning in a climate where women are more likely to have faced rising debts over the last year.

Three in ten (30%) female respondents said their level of debt has increased, compared with 27% of men. Similarly, the number of women struggling to repay the debt they owe is six percentage points higher than men (39% vs 33%).

When it comes to seeking help, men are more likely to seek debt advice than women (16% vs. 12%), and only 9% of women are planning to seek debt advice in the next 12 months.

The research highlights how widespread gender inequalities need to be addressed in order to improve access to financial support and services which can strengthen people’s financial wellbeing.

Women already face significant barriers in and out of work, with 34% of mothers unable to work full-time due to childcare costs or availability, compared to 12% of fathers. One in five (20%) mothers are unable to take up a more senior role at work due to the financial burden of childcare, making them twice as likely as fathers (9%) to feel this pressure.

Dealing with problem debt from former partners is another key challenge, with 2.1 million women having had credit taken out in their name without their consent or had their credit rating deliberately destroyed.

Lauren Peel, Director of Marketing, Consumer Insights and Propositions at Fair4All Finance said“Financial vulnerability can impact anyone but, unfortunately, the path to financial inclusion often discriminates based on gender. Women often face a bigger financial mountain to climb and are less likely to find the support they need to overcome challenges such as persistent debt or credit rejection.

“This International Women’s Day, we want to highlight the progress that still needs to be made across financial services and society more widely to help women, particularly financially vulnerable women.  It isn’t right that in 2024, women still face multiple barriers to accessing affordable credit and are too often left not knowing where to turn for help, resulting in them struggling on or going without.”

Emma Goodwin, Deputy CEO, Fair for You, said “Fair for You works with lots of single parent families, which are predominantly headed by women, and with lots of mothers and grandmothers in households with young children. We know that these groups are at particular risk of financial vulnerability, and this is compounded by the fact that women are less likely than men to seek support after having an application for credit declined. Fair for You is proud to be part of an inclusive community finance sector which, as the cost-of-living crisis continues and households find their budgets tighter than ever, is providing a vital service to women across the UK.”

Sheenagh Young, CEO South Manchester Credit Union, said “Any combination of the motherhood penalty, workplace inequalities, an ethnic minority background or living in a deprived area can severely heighten the risk of women facing financial exclusion. It doesn’t have to be like this, and at South Manchester Credit Union, we are working hard to provide products and services for those who can’t access mainstream financial services. Financial wellbeing and independence shouldn’t be a privilege, and we urge anyone struggling with their finances to seek support from their local credit union.”