Millions of people in the UK are being put off accessing credit products because they fear a rejected application could harm their chances of a loan in the future, according to new analysis from Freedom Finance.
FCA data shows that more than one in 10 (11%) of those who held at least one consumer credit product in the last 12 months had been put off by the ‘fear of rejection’.
This anxiety rises among potentially vulnerable groups, as those who are struggling financially (low resilience – 42%), find it difficult to choose the most suitable financial products (low capability – 17%) or may have lost a job or be struggling with relationship problems (negative life event – 18%) are more affected than most.
David Hendry, chief marketing officer at Freedom Finance, said it was up to the industry to make sure that everybody was able to access borrowing products, saying: “The findings show that there are a huge number of people struggling to access the credit markets, and for many the application is a daunting process.
“This is particularly true for people with thin credit files – often through no fault of their own, with circumstances like divorce or living abroad factored in – or with low financial capability. It is vital however that the financial services industry does not pull up the ladder and abandon these people to loan sharks and unregulated lenders.
“Credit plays a vital role for many people and used in an appropriate way can help reduce expensive, drawn-out debt or to improve their wider financial wellbeing.
“Technology allows people to apply for credit with the confidence that they will be eligible for that product, but we have to make sure everyone is able to access the right tools. The industry and regulator needs to make sure that we are taking a holistic view of individuals’ credit profile through open banking, and not blocking people from loans unnecessarily.”
