Nearly six million Brits have been declined credit in the past three years.
Credit problems are affecting more and more people, leading many more to consider ring fencing their assets whilst their finances remain healthy. Sadly, many more leave it too late for both themselves and their children….
Credit Problems will damage future generations.
The research which follows fails to highlight the effect on your children: not only may you not be able to help them, you may actually tarnish their credit score by association. So why not look at the advantages to you and future generations of setting up a family trust. But you must do it at the right time, when your finances are sound. But on with the bad news about credit problems:
-Credit building cards up by almost 30% in the last 12 months-
• 1 in 8 (12%) Brits turned down for credit in the past 3 years
• Half of Brits who took a payday loan did so after being turned down for credit
• Almost half of Brits (48%) are unaware of potential detrimental effect of payday loans on their credit rating
• New regional credit rating map released: People in the North East have the poorest credit rating, compared to people in North Scotland who have the best
Many people may be shocked when they are turned down for credit, however new research by Confused.com has revealed that nearly six million* (12%) Brits have been declined for credit in the past three years.
The different factors that can affect people’s credit ratings can be a confusing issue, with many people choosing to bury their heads on the subject. Worryingly, new research published today reveals that 60% of people are completely unaware of what their credit rating is. Of those that did know their credit score, more than a fifth of people (21%) didn’t know how to improve it.
Worryingly, 16% of people admitted they have poor credit. A poor credit rating can cause many financial issues from being declined a mobile phone contract to having difficulties getting a credit card. In fact, 6 % of Brits have been turned down for a credit card in the last 3 years.
Almost half (47%) of those with a poor credit rating are more likely to borrow money from friends and family. Shockingly, nearly a third (30%) are more likely to borrow money from unauthorized/private money lenders and 21% had taken a payday loan in the last 3 years.
Regionally, it appears that people in the North East have the worst credit rating (lower than average), compared to people living in Northern Scotland who have the best credit rating (higher than average). The regions that seem to fair average are people who have taken residence in Central Scotland, the Borders and the South West **.
The research highlights that people in the UK are continuing to take out finance ***without thinking about any long term impact it could cause on their credit history. Almost half (48%) of people were unaware or didn’t think that they could be damaging their credit rating just by applying for short-term, high interest loans. This, in fact, could make a person less likely to be accepted for a banking loan at a lower interest rate, further perpetuating the cycle of debt.
The research also reveals how low credit rating can affect more than just finances. Over half of people (55%) feel under high levels of stress as a result of being turned down for credit and 38% say that it has a negative impact on their life even leading to relationship breakdown.
However, there is help out there for those Brits who want to be on the road to better financial well-being using products that help rebuild a damaged credit portfolio, including credit building cards. Good news is these credit building cards are seen to be on the rise in the UK, having more than tripled over the past 3 years. In 2011 there were only five cards of this type available but they jumped to 14 in 2012 (+180%).
In 2013, there are currently 18 on the market – a steady 28.6% rise over the past year. For Brits who want to improve their credit rating, these cards could be ideal. Repaying money on time each month with a card of this type can help when applying for the best deals, mortgages, loans or other credit cards in the future.
Nerys Lewis, Head of Credit Cards at Confused.com says: “We want Brits to get to grips with their credit rating, understand what affects their credit score and try to improve on it. By simply understanding their finance situation better, it can give people a better chance of getting that mortgage, loan or credit card – and at the very best rate.
“With so many credit card providers keeping their best deal for customers with a near perfect credit rating, it’s more important than ever to understand how credit rating works, and how you can use the knowledge to get the best deal.
“In fact, credit building cards can be useful tools to build your credit rating. They can help to create a positive loan repayment history, as the very fact that you’re seen to be successfully paying off a manageable debt each month gets noted on your credit file. So don’t let your credit score hold you back!”
Alongside the research, confused.com has released a regional map highlighting the regions with the best and worst credit scores which can be found here http://www.confused.com/news-