Eligibility checking on the rise as Brits seek credit

Credit card soft searches up 41% in second lockdown, while loan soft searching increases by 64%. Lenders remain in market, stabilising acceptance rates.

02 December 2020: Rising numbers of UK consumers are avoiding unnecessarily risking their credit score by checking their eligibility, as demand for credit grew in the second lockdown compared to the first lockdown. This is according to the latest findings from Experian’s Credit Barometer.

The number of consumers checking their eligibility for credit cards in the first two weeks of lockdown 2.0 (5th – 19th November 2020) increased by 41% when compared to the first two weeks of the initial national lockdown (23rd March – 6th April 2020), while soft searches for loans were 64% higher [1] over the same period.

Soft searches allow someone to check their eligibility for financial products without impacting their credit score. Eligibility ratings show how likely they are to be accepted for products such as credit cards, loans and mortgages before submitting a formal application.

When looking at longer term trends, applications made for credit cards that included eligibility checking was 88% in October 2020, nearly triple what it was five years ago (29%) [2]. This suggests people are taking advantage of wider access to eligibility ratings before making an application, removing much of the guesswork from applying for credit.

Growing demand for credit

Applications for credit cards increased by 40% in the first two weeks of the second lockdown compared to the first two weeks of the first national lockdown. Loan applications also increased, by 14% over the same period [1].

The data also shows that the over 60s age group registered the largest proportional increase in applications for credit in lockdown 2.0 compared to the first, for both credit cards (+59%) and loans (+54%).

This growth in applications highlights the importance of eligibility checking, since formal applications for credit leave a ‘hard search’, which could impact an individual’s credit score. While search footprints do not record the outcome of an application, a string of recent hard searches can signal financial stress and may, therefore, worry prospective lenders.

Credit supply resilient

Compared to the previous national lockdown, there’s a greater supply of products to meet consumer demand, as financial providers continue to look for new borrowers.

Currently, there are 41 lenders offering loans via Experian, which has reached pre-Covid levels. 46% [3] of people will see a loan they have a strong chance of being accepted. Among consumers with some degree of eligibility, 60% will be pre-approved, meaning they are guaranteed to be accepted for that product. When comparing people’s chances of being approved for a loan to the start of the lockdown in March, their chances are now 84% higher.

When it comes to credit cards, 61% of consumers will see a product that they have a strong chance of being accepted for, with 44% pre-approved. The rise in consumer eligibility over this lockdown means people’s chances of being approved for a credit card is now 35% higher than at the start of the first nationwide lockdown.

As well as telling people their eligibility, Experian’s price comparison service will also display guaranteed rates from participating lenders so applicants know exactly the interest rate they’ll get before they apply.

Amir Goshtai, Experian Marketplace managing director said:

“It’s encouraging that while demand has grown, lenders have also been able to continue offering a diversity of credit products. This suggests positive signs for the UK credit economy, especially when compared to the first lockdown.  

“It’s really important people make informed choices when they search for credit. Checking their credit score and eligibility for financial products helps them to make the best decisions knowing which products they can apply for, with the confidence that they’re likely to be accepted. We want to give people as much transparency as possible, which is why we also offer guaranteed rates so they know the interest rate they’ll get before they apply”.

Today’s news follows the launch of Experian Boost, a new product that can instantly increase someone’s Experian Credit Score. It’s a free service that helps people to take control of their credit score by volunteering new relevant and real-time information via Open Banking.


Notes to editors

[1] Application data was compared to the first two weeks of the spring lockdown (23rd March – 6th April 2020), to the first two weeks of lockdown 2.0 (5th – 19th November 2020). While the second lockdown was England-only, it represents the weeks when the highest number of people were living under stay-at-home conditions.

Data is based on Credit Applications Previous Searches (CAPS) made via the Experian bureau. CAPS data is a record of someone’s successful and unsuccessful applications made via the Experian bureau.

[2] Analysis of CAPS data, 2015 – 2020. Data looked at February 2015 and October 2020 for comparison purposes.

[3] All figures taken from Experian’s Credit Barometer w/c 9th November 2020.

Media contact

Rajan Lakhani, Head of PR, Consumer, UK&I, Experian

Tel: (+44) 07976 634 484 | E: rajan.lakhani@experian.com

Brands2Life, PR agency

Tel: +44 (0)20 7592 1200 | E: chris.sury@brands2life.com

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