One in Five Brits Would Suffer Serious Hardship if they Lost their Job
In line with Debt Awareness Week and amidst the COVID-19 outbreak, TransUnion offers advice on remaining financially stable
Britain is facing an unprecedented time, with the Covid-19 pandemic threatening jobs; particularly freelancers, the workforce on ‘zero-hours’ contracts, leisure workers and small business owners.
New research by TransUnion – one of the UK’s leading credit reference agencies – commissioned just before the outbreak, finds that one in five Brits (21%) wouldn’t manage financially if they lost their job tomorrow, and this number is likely to have escalated.
Alongside this, the research also reveals that less than half of Brits feel in control of their finances (44%) and an even lower proportion (36%) consider themselves financially stable.
This is likely compounded by our reliance on credit cards – around seven in 10 (74%) of us have at least one credit card, and of those, one in 10 (8%) have at least four.
What’s more, some Brits wouldn’t be able to maintain their current lifestyle without this reliance on credit cards – with 11% saying as much. But TransUnion is urging Brits to think carefully when it comes to credit, and to consider the different options available and long-term implications.
Kelli Fielding, managing director of consumer markets for TransUnion in the UK comments: “Credit is an important part of our financial makeup and helps us to manage financial ups and downs but it’s really important that consumers are familiar with their credit report and score so that they know what products and rates they’re likely to be eligible for.
“Making multiple applications can have a negative impact on your credit score and make it difficult to secure further credit. Many of the online tools available to check your score will also offer guidance on what the options are. Do the maths and think about the interest over time, don’t just go for what might seem the quickest option, and make sure it’s going to be affordable.”
In the current situation, this is even more important as we face uncertain times ahead. The government has also launched financial relief plans to try and support Brits. These include a three-month mortgage break for those experiencing payment difficulties.
Kelli Fielding continues: “People are naturally concerned about how a mortgage payment holiday might impact their credit score. Generally it shouldn’t have a negative effect but it’s important to check your credit report regularly. Our research showed that almost half (46%) of UK consumers hadn’t checked their credit score in over a year.
“Whilst people are getting to grips with a lot of sudden changes as a result of the current pandemic, it’s important to think about the longer term too. Taking control of your credit report and score will not only help you access the finance you may need now but will ensure you’re protecting your financial standing as much as possible.”
Tips to help maintain your financial stability during the Covid-19 pandemic:
- In the short term, keep up to date with ever-changing guidance from the government on what financial support is available dependent on your situation. You’ll also find help is available from many lenders so check in with your bank or credit provider
- For the long term, if you’re considering credit, be sure to explore the various options available and think about the interest over the full term, not just the headline rate. Be careful not to overstretch yourself
- Think carefully about the implications of the different kinds of credit. For example, a secured loan (one that’s protected against a significant asset; such as a house or car) may have a lower interest rate but it’s a big risk that needs to be properly considered
- Check your credit score on a free checking site such as Credit Karma, MoneySuperMarket, or TotallyMoney. Knowing your credit score will help you to understand what products you’re likely to be accepted for and ensure the information held is accurate.