Brits in Europe are least likely to think about their credit score, and most likely to turn to higher cost forms of credit

• Nearly half (46%) of people in the UK never think about their credit score, the highest in Europe (31%), new research from CRIF finds
• One in ten (10%) have been turned down for traditional lending since 2020, with half (50%) turning to higher cost forms of credit such as payday and short-terms loans
• CRIF has expanded its open banking-powered consumer credit scoring service, offering detailed and tailored creditworthiness analysis for both UK consumers and businesses
• New Credit Passport® badge launched for small businesses, helping them showcase their financial health directly to lenders, and to build confidence with customers and suppliers.

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Millions of people in the UK admit they never think about their credit score, despite many saying they are expecting to borrow more money from their bank or lender in order to manage the cost of living crisis. New research commissioned by CRIF – Europe’s leading provider of consumer and business credit information – surveyed thousands of people in countries across the continent including France, the Czech Republic, Italy, Germany, Slovakia, and the UK.

The findings show nearly half (46%) of UK consumers never think about their credit score, the highest of all European countries surveyed, including France (35%), Germany (40%) and Italy (27%). This is despite the UK having one of the highest household debt levels in Europe*, and one in five (19%) saying they expect to borrow more from their lender in the next 12 months.

Understanding of how credit scores are calculated is also poor. Less than half (48%) of people in the UK say they understand how their score is calculated, and one in five (20%) say that were their score to go down, they wouldn’t know how to improve it.

This lack of engagement and understanding is having a detrimental effect. One in ten (10%) consumers say they have been turned down for borrowing since March 2020 (the start of the pandemic lockdowns in the UK). Of this group:

• 64% say they received no information from their lender on how to improve their situation
• Half (50%) say they had to turn to more expensive forms of credit, such as payday or short-term loans – the highest in Europe
• 52% say they were surprised to be turned down as they believed they had a good credit history.

It’s not just UK consumers that are in this situation – small businesses are also. These consumer findings build on previous analysis by CRIF into the creditworthiness of the UK’s small business population. The SME Health Report found that banks and many clients are now seeing more companies as a higher risk, and the need for business owners to know, and communicate, their “real-time” business credit score has become essential.

Sara Costantini, CRIF’s Regional Director for the UK & Ireland, said: “The increasing cost of living is putting huge strain on people’s finances. The fact that many more plan to turn to their banks for financial support, coupled with rising interest rates, mean it’s vital that people have a good grasp of their creditworthiness.

“However, there is a severe lack of awareness and understanding among people in the UK of their credit score, how it works and how to improve it. During these challenging economic times, it’s critical that consumers and businesses alike fully understand their creditworthiness.
“Financial providers need to work to engage and improve people’s understanding, utilising innovations in open banking, and enabling more accurate, lower-risk lending decisions that can help people avoid turning to more costly forms of credit.”

To better support consumers and businesses, CRIF recently expanded its consumer credit solution in the UK. Now available to UK banks and lenders, it utilises open banking technology to securely connect to someone’s current account and access real-time, in-depth information on their financial situation. This consumer-focused service joins CRIF’s existing credit scoring service for businesses, Credit Passport®, which is currently used by over 30,000 UK small businesses to help them better understand and improve their credit score and evidence their creditworthiness to lenders.

CRIF has also launched its new Credit Passport Financial Health Badge to help more UK small businesses communicate their financial health to customers, suppliers and partners. Users of Credit Passport’s Plus Plan can now choose to either display on their website their full credit score or state that they are ‘financially healthy’. Due to the real-time nature of CRIF’s credit scoring services, the badge is updated automatically each day, helping businesses build confidence and secure relationships during uncertain economic times.
The consumer findings are part of wider research by CRIF into the cost of living crisis in Europe, and its impact on attitudes towards banking and financial services.

The full report, Banking on Banks, is available for free.