Which Britons have been refused credit?

Matt PalframanDirector, Financial Services Research
February 22, 2021, 12:17 AM GMT+0

YouGov Profiles data examines the 12% of consumers who have been denied an application for a financial product in the past three years

Applying for credit is usually considered an easy way to start building a positive credit score. It can, of course, be more difficult if lenders won't approve your application in the first place.

YouGov Profiles data reveals that 17% of Brits have had an application for a financial product refused on the grounds of their credit history. Of those who have been turned down, two-thirds have been declined in the past three years (67%). This group are also less likely to have an active credit card than the general public (38% say they do not have one vs. 29% nat rep).

So who are these Britons - and how do they feel about the lenders who have declined their applications?

Two in five Britons who have been declined think they have "good" or "fair" credit

Our demographic data indicates that Brits who have been declined credit in the past three years are overwhelmingly men: two-thirds are male (66% vs. 48% nat rep) and a third are female (34% vs. 52% nat rep). This may suggest that men are generally either more ambitious (or unrealistic) about the kind of financial products that they apply for - or that banks and lending organisations may not be educating them about the kinds of financial products that are within their reach.

Perhaps revealingly, a significant proportion of those who have been turned down may not know there is a problem with their credit at all. While just over half say that their score is bad or poor (53%), two in five say it is good or fair (38%). This leaves open the question of whether banks are taking an overly severe approach to how they approve people for financial products - or whether consumers are not fully aware of any issues on their credit file. In any case, the COVID-19 crisis will likely do little to make lending policy less strict: news reports have indicated that some institutions are expecting to lose billions in unrepaid loans.

Brits who've been turned down for credit are more cynical about banks

If there is a gap between Britons' perceptions of their creditworthiness and those of banks, it could cause real problems for lenders. Consumers who have been turned down are more likely to believe that banks try to trick people out of their money (43% vs. 35% nat rep) and that all banks are basically the same (76% vs. 72% nat rep).

Again, there may be opportunities to educate this group of consumers. Two in five agree that financial matters confuse them (40%) next to a third (35%) of the general public and just 47% say they manage their finances well compared to 69% of the general public. If banks cannot directly lower the barriers to credit, there may still be ways to help consumers climb those obstacles by offering advice and demystifying their criteria.

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