Signs of Improvement in UK Household Finances, According to Latest TransUnion Research

Research from global information and insights provider TransUnion, one of the UK’s leading credit reference agencies, shows potential signs of stabilisation in the impact of COVID-19 on household and personal finances, suggesting that the various financial support measures on offer are easing the burden.

The number of households negatively impacted remains largely unchanged, at three out of five*, but the number of people not currently impacted who expect they will be negatively affected in future has dropped from 28% to 19% over just three weeks**.

The figures seemingly indicate that more people now have reassurance that, from a financial perspective, they are braced to manage the uncertainty ahead, at least in the near term.

Commenting on the latest findings, Kelli Fielding, managing director of consumer interactive for TransUnion in the UK noted: “The small improvements seen in our tracking of the financial impact on consumers are a welcome indication that people are utilising the support that’s on offer for those experiencing financial difficulty as a result of COVID-19.”

With relief measures put in place by the government, and by banks and finance providers, there is a range of support available for consumers; such as agreeing payment holidays – also called emergency payment freezes – reducing payments, or increasing credit limits.

Kelli Fielding continues: “The study also shows that UK consumers are actively taking positive steps to manage and maintain their financial standing. We’re seeing an increase in the numbers who know their credit score, suggesting that the current uncertainty and the desire to understand and protect their financial position during this pandemic has encouraged more individuals to take control of their credit information.

“Tools such as TransUnion’s CreditView – a white-labelled product used by a number of leading banks and finance providers – allow consumers to view and understand their credit report and score, with guidance on finance, as well as the ability to correct any errors in their credit information. We’re also introducing the ability for consumers to model “what-if” borrowing plans and understand in advance the impact that different spending may have on their credit score. This will be increasingly useful in the current climate as consumers seek solutions and assurance.”

Ability to pay household bills

When it comes to their ability to pay household bills and repay loans, UK households are more optimistic than they were even a few weeks ago. Of those who say their household income has already been negatively impacted, the number who are concerned about their ability to pay bills has dropped from 70% to 65% and the number that do not know how they will pay bills or loans is down from 23% to just 11%.

Brendan le Grange, director of research at TransUnion in the UK explained: “This feeling of greater preparedness is also seen in the overall population – with 18% of UK consumers saying there were not concerned about their ability to pay bills at the end of March, up to 22% three weeks later, highlighting increased confidence, perhaps as measures have been put in place or agreements made with finance providers.

“That said, with an end date for the lockdown period not yet known, there is still a great deal of concern about impending financial hardships in the months ahead. For example, although fewer people now feel they will face difficulties in paying their bills in two to four weeks’ time – down to 23% from 39% at the end of March – those expecting to struggle financially between one and three months’ time has increased. We’re also still seeing concerns regarding the payment of certain bills, with four in 10 people struggling with rent (44%), utility bills (44%) and credit card payments (42%).”

In this climate, businesses need to use all the tools available to empower consumers to take charge of their finances, as well as engaging with their customers to provide support to those experiencing difficulty, and ensuring any finance arrangements to solve immediate problems are affordable and sustainable in the long-term.

Find out more about TransUnion’s CreditView solution here.

*TransUnion’s consumer research study of 1,057 UK adults conducted on 6 – 7 April 2020

**TransUnion’s consumer research study of 1,095 UK adults conducted on 23 – 24 March 2020