Credit Awareness Week: Millions still excluded from mainstream financial services despite drop in ‘credit invisibles’

Experian reduces thin and no file population by 620,000 – and pledges to go further still by adding more new data sources and improving the industry’s data quality. Experian Boost can help more people into the mainstream financial system.

UK, 22 March 2021: Experian has reduced the number of people excluded from mainstream financial services by more than 620,000 - but new analysis shows more than five million are still missing out.

Nearly 5.2 million people in the UK are virtually invisible to the financial system because there is insufficient information about their financial track record for organisations to make informed decisions. These ‘credit invisibles’ find it difficult to access mainstream financial services or have to pay a premium to do so.

Experian has worked to reduce the number by over 620,000 since the analysis was first carried out in November 2018. Financial information about people with thin or no credit files has been added to the bureau by working with the industry to improve data quality and introduce new data sources. Online bank, Monzo, now reports to Experian, as does telecoms provider, BT.

The release of the latest analysis coincides with Credit Awareness Week 2021, when people are encouraged to engage with their credit history and wider financial situation. The event is particularly pertinent this year, as people continue to struggle with the financial implications of the Coronavirus pandemic, which has undermined the resilience of many.

Experian’s analysis shows significant demographic variations in the Invisible population, with almost a third (32%) under 30. While understandable, the trend is concerning. Young people have had less time to establish a credit record, but are amongst the hardest hit by the pandemic and the most in need of affordable credit.

This trend may also underpin the regional variations seen in the data. Four of the five parliamentary constituencies with the highest proportion of credit invisibles have large student populations. Sheffield Central has the greatest percentage (18.46%), but Manchester, Gorton (16.39%), Nottingham South (16.39%) and Cardiff Central (16.11%) are not far behind.

Rayleigh and Wickford is the constituency with the lowest proportion of credit invisibles (6.82%). Closely followed by Darlington (6.92%) and Wentworth and Dearne (7.05%).

Lisa Fretwell, Managing Director of Data Services, at Experian UK&I, said: “Since we first conducted this analysis in November 2018, we have been tireless in our campaign to improve credit visibility and made huge strides in this area.

“New data sources and their integration into credit reporting have been instrumental in moving us forward. Over the past two years we’ve added data from telecoms, fintechs and other sectors to bolster people’s credit files.

“Open Banking also holds huge potential to facilitate authorised data sharing between financial services providers. This is already helping lenders to better understand people and make more informed decisions on their affordability. Recently launched, Experian Boost uses the technology to allow people to factor transactional information and regular payments into their credit scores. The service can be used to build out thin files, potentially tipping the balance between someone being marginally declined and accepted for credit.

“While we’ve come a long way already, there is still far to go – and we’re now battling strong economic headwinds. The pandemic will undoubtedly test the financial resilience of many. It’s now more important than ever that the industry works together to make credit invisibles, visible.”   

To see a full constituency breakdown of the credit invisibles across the UK, you can view our interactive dashboard on Tableau here.

-ENDS-

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Joseph Green, PR Manager, Corporate & Business, Experian UK&I

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