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46% of the public have never checked their credit report and 75% wrongly believe there’s a ‘credit blacklist’. Comprehensive guide about credit information launched to boost public understanding.
UK, 22 March 2021: A lack of understanding around credit ratings has been exposed, with new consumer insights revealing low levels of engagement and knowledge about how credit reporting and scoring work.
Nearly half of the UK public (46%*) have never checked their credit report, a figure which rises to 65% among 18 to 24-year-olds, while 69% don’t know what their credit score is.
The new research from Experian has been released for Credit Awareness Week (CAW), an industry initiative now in its fifth year, which aims to improve understanding about how credit reporting works so people can take control of their finances and achieve their financial goals.
The findings reveal that awareness is heading in a positive direction. When the survey was first conducted in 2017, 55% had never checked their report and 78% did not know their score. Credit experts have attributed this increase in awareness to people taking greater interest in their personal finances as a result of the COVID-19 pandemic.
However, there is still much to be done, with common myths about the credit industry persisting. Three quarters (75%, down from 80% in 2017) believe being put on a ‘credit blacklist’ will impact their ability to access affordable finance – despite there being no such thing.
Many people still wrongly believe credit reference agencies make decisions about whether a credit application will be accepted, when it is actually the lender who decides. Nearly a third (30%) incorrectly believe credit reference agencies decide the outcome of credit card applications, while 21% make the same incorrect assumption for loans.
Awareness about credit eligibility services remains low. Eligibility can help people find the most appropriate product for their circumstances by showing them which cards, mortgages, and loans they are likely to be accepted for without damaging their score.
Yet, the research claims 47% have never checked their eligibility, meaning they could potentially be putting their credit score at risk by often applying for products they are unlikely to qualify for. Awareness is particularly low among the younger generation, with just 7% of 25 to 34-year olds having ever checked their eligibility, compared with 15% in the 55+ age group.
However, younger people are also looking for industry assistance in building their credit scores. For example, a quarter (25%) of those aged 35-34 believe subscription services such as Netflix and Spotify should be included in a credit report.
Recently launched Experian Boost, a free credit-score-improvement service, allows people to do this, taking into consideration everyday payments to subscription services, as well as regular payments to things like council tax and savings. This helps contribute to people’s overall financial image and could positively impact chances of securing credit in the future.
James Jones, Head of Consumer Affairs at Experian, said: “Our annual Credit Awareness Week survey gives us the opportunity to test public understanding of these important issues. This year’s findings, in the context of the COVID-19 pandemic, provide much food for thought.
“We’ve made positive strides compared to previous years, with recent progress a likely outcome of COVID-19 encouraging more people to pay greater attention to their personal finances. However, the clear message from the findings is that there is much more to do. As an industry, it’s important we empower people with the knowledge to take control of their finances and understand how they can make their credit information work for them.”
“The launch of Experian Boost is the latest example of how we’re finding new ways to help people take control of their finances through credit-score improvement. Other initiatives include an industry-led guide to credit scoring, which aims to build understanding about credit information, how and why it is used by lenders, and what rights consumers have over the information used and shared.”
“Particularly during these challenging times, understanding and monitoring your credit report and score is a key element of financial management and helps you to access the best products available. Experian, through the Credit Awareness Week campaign, ongoing educational work, and work with the financial services industry is committed to improving public awareness and understanding of the credit system.”
To mark CAW, Experian has produced an updated credit score map, which reveals the average scores of 391 areas across the UK. Encouragingly, the average UK Experian Credit Score has been rising year-on-year to 792 in 2020, up from 776 in 2019 and 767 in 2018**.
To promote further understanding around credit reports and decisions, the credit reference industry has created a comprehensive guide: ‘Understanding your credit information and how lenders use it.’
The guide aims to empower consumers by helping them understand the type of information lenders us when processing a credit application and why, and what rights they have in relation to their credit information.
Notes to editors
‘Understanding your credit information and how lenders use it’
Experian, Equifax and TransUnion have collectively updated the official guide to credit scoring – entitled “Understanding your credit information and how lenders use it.”
The drafting process took on board industry body feedback, including from UK Finance, the FLA, lenders and consumer groups. In pulling together this updated guide, we want to empower consumers, helping them understand the types of information that lenders use at various stages of the lending process, how and why that information is used, and what rights consumers have in respect of their information.
You can find the full guide here.
*YouGov poll conducted of 2,056 people for Experian between 5th and 8th March 2021
**Experian analysed credit scores of 11 regions, split into 391 areas of the country as of 31 December 2019.
Joseph Green, PR Manager, Corporate & Business, UK&I, Experian
Tel: +44 (0)7812 737 768 / E: Joseph.email@example.com
Experian is the world's leading global information services company. During life's big moments – from buying a home or a car, to sending a child to college, to growing a business by connecting with new customers – we empower consumers and our clients to manage their data with confidence. We help individuals to take financial control and access financial services, businesses to make smarter decisions and thrive, lenders to lend more responsibly, and organisations to prevent identity fraud and crime.
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