Young adults maximising access to credit
Nearly one in ten young people has access to three or more current accounts with overdraft facilities.
- 7% of adults have three or more personal current bank accounts with an overdraft facility, rising to almost one in ten (9%) 18 - 24 year olds
- Of those people who have more than one current account with overdraft facilities, 14% have more than three providers, rising to 27% among 18 - 24 year olds
- Of those people who have more than one current account with overdraft facilities, one in fifty (2%) 18 - 24 year olds has their accounts with more than five providers
- Almost one in ten adults (9%) have overestimated their income when applying for credit, including 11% of 18 - 24 year olds
- More than one in four (26%) mortgage holders say that a drop of up to £300 in monthly income would mean that they would be unable to meet their monthly mortgage repayments
- One in twenty (5%) people have stopped paying off their bills in full, reverting to minimum / fixed payments
Independent research commissioned by Callcredit Information Group has today revealed that young people aged 18 - 24 appear to be maximising available credit by taking out multiple current accounts with available overdraft facilities across multiple providers. Almost one in ten (9%) adults aged 18 - 24 years admits running three or more current accounts with overdraft facilities and 27% of 18 - 24 year olds who have more than one account admit to using more than three different current account providers.
The research also revealed that a significant number of GB adults - nearly one in ten (9%) - admitted to over-inflating their income when applying for credit in a bid to secure a higher credit limit, with 6% of people acknowledging that they have applied for credit knowing they might not be able to meet the repayments.
"While the end of the recession may be in sight, it seems that many consumers continue to struggle in managing their finances," said Graham Lund, Managing Director, Callcredit Information Group. "What's particularly concerning is the proportion of young people who appear to be targeting multiple providers for access to multiple overdraft facilities. Lending and borrowing responsibly to ensure affordability is vital for the recovery of the economy and lenders need to have a complete customer view - not only of accounts held with them but externally too - to ensure a consumer is not overburdened with credit."
The research also revealed one in four mortgage holders would default on their mortgage if their monthly income dropped by just £300, with this rising to three out of ten (32%) among the 44 - 54 year old age group.
Michael Middlemiss, Head of Credit Risk, Sainsbury's Bank adds, "This research reveals some alarming trends around how consumers view credit and how their behaviour has changed over the recession. Monitoring affordibility and being able to identify quickly and effectively any change in circumstances which may affect a consumer's ability to repay is not a "nice to have" but rather key to being a responsible lender and essential good business practice."
About Callcredit Information Group
The Callcredit Information Group (CIG) brings together experts across the fields of credit referencing, marketing services, interactive solutions and consultative analytics to enable our client base of businesses and consumers to make informed decisions using our innovative products and services.
CIG's products and services are delivered in five distinct areas:
- Strategic Planning
- Customer Acquisition
- Customer Verification
- Customer Management & Value Building
- Collections & Recoveries
To ensure effective delivery, the Group is divided into two complimentary divisions:
- Credit Solutions, encompassing specialists in credit risk, Identity verification services and tracing tools
- Marketing Solutions, providing specialist knowledge in customer analytics, consumer targeting, database building and hosting, marketing communications, business modelling and market analysis www.callcreditgroup.com
Callcredit Check is the consumer arm of credit reference agency Callcredit, providing consumers with instant online access to their credit report and services to help them monitor their credit status. www.callcreditcheck.com