New research from Experian has revealed that there are over 5 million (5,049,129) people in the UK who are virtually invisible to the financial system, because there is insufficient information available about their financial track record.
These people, referred to as credit invisibles, find it difficult to access mainstream financial services or have to pay a premium to do so.
This deficit of relevant financial information can also present problems for people trying to access crucial public services, owing to difficulties verifying their identity using online credit-report driven services.
It’s not just those on the poorest incomes that are affected by this issue, the UK’s Invisible population comes from a variety of backgrounds, including:
- Young people who have not yet established a credit record.
- Older people who may have either paid off their mortgage and have limited use for credit, or who have not previously relied on credit and, therefore, have no file.
- Recent immigrants (or potentially returning expats) who may have little or no credit footprint, and therefore struggle to open bank accounts and/or rent property.
The depth of the nation’s credit invisibility problem
Experian has also highlighted the extent of the ‘credit invisibility’ issue across the UK, with new analysis identifying the areas of the country with the greatest proportion of people at risk of financial exclusion.
The constituency affected the most by the issue is Sheffield Central with credit invisibles making up 17.7% of the population, closely followed by Edinburgh North and Leith (16.1%), Edinburgh East (15.9%), and Lancaster and Fleetwood (15.7%).
It’s likely that large student populations are the reason for many of these parliamentary constituencies ranking so high.
At the other end of the scale, Wentworth and Dearne (5.6%), Sedgefield (6.2%), Rother Valley (6.3%), Rayleigh and Wickford (6.4%) and Maldon (6.5%) are the constituencies with the lowest proportion of credit invisibles.
Jose Luiz Rossi, managing director of Experian UK&I, said: “Our latest analysis highlights just how far-reaching ‘credit invisibility’ is in the UK – it’s on all of our doorsteps, regardless of location. In this current economic climate, the consequences for millions of people could be devasting.
“Tackling this issue is a huge priority for us, and we’ve been working hard to find innovative ways to bring more people into the mainstream financial system.
“The solution to this challenge lies in a combination of industry-led financial education coupled with the use of new, relevant data sources which can help build out thin credit files and deliver better financial products and services for everyone.
“Open banking can help too. Experian Boost is a prime example of an open banking powered service helping people to potentially tip the balance between being marginally refused and accepted for credit.”
Although the credit invisibles population still makes up 9% of the total UK adult population, progress has been made in recent years. Since the analysis was first carried out in November 2018, Experian has worked to reduce the number of credit invisibles by over 750,000.
Financial information about people with thin or no credit files has been added to the bureau by working with the industry to improve data quality and introduce new data sources.
Rossi continues: “It’s pleasing to see our hard work is making a positive impact, but there’s still plenty more for us to do and we believe the wider industry can play a significant role in helping us move forward. It’s important for organisations who have not previously shared data, to recognise what they can do with the information they already gather. They can make a real difference to the most vulnerable in society.”
The findings have been released as part of Credit Awareness Week 2022 – an industry-wide initiative which aims to encourage more people to engage with their credit history and personal finances.
This year’s event is especially significant, as more people begin to struggle financially against a backdrop of rising inflation and the strain of rising living costs. This follows the pandemic, which has tested the financial resilience of millions.
| Constituency | Number of Credit Invisibles | % Credit Invisibles |
| Sheffield Central | 16,608 | 17.67 |
| Edinburgh North and Leith | 16,115 | 16.05 |
| Edinburgh East | 13,868 | 15.85 |
| Lancaster and Fleetwood | 12,112 | 15.69 |
| Edinburgh South | 12,199 | 15.27 |
| Edinburgh South-West | 13,428 | 15.05 |
| Leeds North-West | 11,190 | 15.00 |
| Leeds Central | 16,309 | 14.87 |
| Cardiff Central | 10,174 | 14.82 |
| Manchester Central | 16,967 | 14.60 |
| Constituency | Number of Credit Invisibles | % Credit Invisibles |
| Wentworth and Dearne | 4,617 | 5.55 |
| Sedgefield | 4,555 | 6.24 |
| Rother Valley | 5,314 | 6.33 |
| Rayleigh and Wickford | 5,641 | 6.37 |
| Maldon | 5,242 | 6.52 |
| Basildon and Billericay | 5,312 | 6.54 |
| North-East Bedfordshire | 6,827 | 6.60 |
| Chelmsford | 6,001 | 6.62 |
| Morley and Outwood | 5,949 | 6.63 |
| Witham | 5,344 | 6.70 |
