Scots most likely to be overindebted

Nearly one in twenty Scots with unsecured debt is paying more than 50 per cent of their income to service their borrowing each month according to research from online credit report service MyCallcredit.

Its research also revealed Scots are more than twice as likely to be out of their depth with their finances than people across the UK as a whole.

However, the news isn't all bad. The vast majority of the seven out of ten Scots with debts say they are financially comfortable.

MyCallcredit director Alison Nicholson says:

"Only one per cent of people across the UK are paying more than 50 per cent of their income to service their debts on a monthly basis, but in Scotland that jumps to 4.4 per cent.

Anyone who is spending more than 25 per cent of their income servicing unsecured debt repayments is considered overindebted according to the Department of Trade and Industry guidelines, so the situation in Scotland is particularly worrying.

The industry needs to continue developing more responsible lending practices, like introducing true affordability checks at the time a credit application is made, and individuals need to take stock of their overall financial position to make sure they are applying for credit responsibly."

Key Findings
  • Only four in ten Scots know exactly how much they owe (42.3 per cent) compared to nearly six out of ten (55.8 per cent) across the UK.
  • Of the Scots who have debts 96.7 per cent are comfortable with them compared to 92.7 per cent nationally.
  • Double the number of Scots (1.7 per cent compared to 0.7 per cent across the UK) say they are out of their depth with their finances.
  • Four times as many Scots (4.4 per cent against an average of 1 per cent) are paying 50 per cent or more of their monthly income to service unsecured debts.
  • 94.6 per cent of Scots said it was only reasonable to spend up to 20 per cent of their income repaying unsecured debts, like credit and store cards.
  • Only 88.1 per cent of Scots are spending 20 per cent or less paying their unsecured debts.
Editors notes
  1. The research was carried out for MyCallcredit by NEMS market research among 1001 adults between 18 May and 25 May 2006.