Cost of Living Crisis Drives Nearly 17 Million Consumers To Check Their Credit Score More Often
Almost three in 10 (28%) consumers – nearly 17 million people[i] – are checking their credit score more often due to the cost of living crisis, with nearly half (47%) doing so because they plan to apply for more credit.
The research from TransUnion, one of the UK’s leading credit reference agencies, showed that the majority (75%) of those checking their credit report and score more frequently feel more in control of their finances as a result.
The top three reasons for people keeping a closer eye on their credit score during the cost of living crisis are increased awareness of their finances, needing to apply for further credit or planning to take out a bank loan.
“Some consumers are struggling to access the finance they need, with the turbulent political situation in the UK having led to rising interest rates and fewer products on offer. Taking control of your credit report and score is so important as it can help boost financial resilience and support access to credit when you need it,” said Kelli Fielding, managing director of consumer interactive at TransUnion in the UK. “With an increasing appetite for credit as a result of the rising cost of living, it’s essential that people are familiar with the information contained in their credit report, so they can check it’s accurate and can take steps to strengthen their credit profile as needed.”
The findings come alongside TotallyMoney research which shows that a third of adults may find it harder to access credit products from mainstream lenders at better rates due to limited credit history.
Alastair Douglas, CEO from TotallyMoney said: “Our study suggested that 16 million UK consumers currently wouldn’t have money available for an unexpected payment of £300, so it’s not surprising that many are planning to apply for credit to help navigate the current financial uncertainty. At TotallyMoney, we will continue to provide customers with free access to their credit information to ensure that their financial future remains firmly in their hands. In particular, this can help support the financially fragile with the tools they need to navigate this economic environment.”
TransUnion and TotallyMoney are urging UK consumers to regularly check their credit report and score to help support financial resilience and access to credit when needed, with some top tips below:
1. Make sure you’re on the electoral register – TransUnion’s survey showed that a tenth (10%) of consumers have signed up to the electoral register to help boost their credit score since the cost of living crisis worsened in April, which shows there’s an understanding of the importance of this. If you’re not already registered, this is an important step in helping to strengthen your credit score.
2. Don’t make multiple applications over a short timeframe – With 47% of consumers saying they are checking their credit score in advance of applying for credit due to the cost of living crisis, there could be a risk of some making multiple applications. This can be a red flag to lenders, as seeing many applications over a short period can suggest financial difficulties and could impact your ability to get credit.
3. Ensure repayments are made on time – TransUnion research suggests that more than one in 10 (11%) people saw their credit score drop due to a missed payment during the pandemic. Paying on time is essential to avoid negatively impacting your credit score.
4. Regularly check your credit report – As well as feeling more in control of your finances, this can help you understand and protect your financial standing and know what kind of finance you’re eligible for. It can also help you monitor for fraudulent activity as if someone tries to use your identity, this is one of the places you’re likely to spot it. This is really important at the current time, with 73% of people having been targeted by scams between May and August of this year.[ii]
5. Avoid keeping a high balance on your credit card – Lenders look at how much credit you’re using so try not to hold a high balance on credit cards. If your balance is high, ensure regular monthly payments are made and try to pay more than the minimum when you can.
You can check your TransUnion credit report and score for free with TotallyMoney and other credit score providers.
Unless otherwise stated, all TransUnion research referenced relates to an independent, nationally representative survey of 2,000 UK adults carried out in October 2022.
The study from TotallyMoney references a recent white paper with PwC: Overlooked and financially under-served (totallymoney.com)
[i] Three in 10 (28%) of UK consumers are checking their credit score more often since the cost of living crisis worsened in April. According to latest ONS figures, the current UK adult population is 59,597,300, which means 16,687,244 have checked their credit score more often
[ii] TransUnion research in July 2022 surveyed 2000 UK consumers and found that 73% had been targeted by a scam between May and August 2022