Less than half of Brits considered creditworthy

| December 19, 2012
Less than half of Brits considered creditworthy

Fifty-seven per cent of UK adults are at risk of having an application for credit turned down by a mainstream lender according to a new report.

The ‘Mind the Credit Gap‘ report commissioned by aqua credit cards suggests that even people with a good credit rating and earning more than £50,000 could have a credit application turned down.

Since the financial crisis lenders have significantly tightened their lending criteria, to the extent that 69 per cent of women and eighty-two per cent of young people aged between 18 and 24 years are now likely to fail a credit check.

Reasons for being refused credit include having no credit history, either because of having recently entered the country or due to never having had a credit agreement before.

aqua credit cards’ report highlights the importance of building up a strong credit score as people risk being turned down by utility providers, mobile phone companies and Internet Service Providers if they fail to pass a credit check.

Despite the importance of a strong credit score, 79 per cent of people do not know what their credit score is, and more than half have no idea how to improve it.

Simple steps such as being on the electoral roll and paying bills on time can make a significant difference to a credit rating.

It is also important to check that credit record details are accurate, and to close unused credit card accounts and cancel direct debits that are no longer required.

James Corcoran, CEO of aqua credit cards, said: “Surprisingly one in two adults are at risk of being declined credit by mainstream lenders – that’s over 25 million people whose lives are being affected.

“The irony is that the people who need their money to go further are the ones who end up paying more – paying for utilities and mobile phones on a pay-and-go basis for instance can cost up to 27% more than paying via direct debit.”

According to uSwitch.com 59 per cent of Brits will fund Christmas using credit cards.

The comparison site warns that this could lead to debt in the long-term, if the card balance isn’t cleared in the New Year.

Michael Ossei, personal finance expert at uSwitch.com, said: “The high number of consumers willing to put themselves deeper in debt just to stave off the embarrassment of not giving presents sends alarm bells ringing.”

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