Easy Credit for Most British Consumers

A new report "Sub Prime Lending" from Mintel finds just one in nine adults experiencing problems obtaining credit.

Latest research questioning 2,166 adults shows that the majority of consumers have not experienced any difficulties in obtaining credit such as loans, overdrafts and plastic cards. Only one in nine adults have experienced some difficulty when applying for credit, while a small 5% of consumers have been refused credit once, but had no difficulty in obtaining it elsewhere. Just 4% claimed that they had been refused credit on numerous occasions, although they had eventually managed to obtain credit. There remains 3% of the population who are simply unable to obtain credit - with twice as many men as women falling into this category.

Looking specifically at consumers' past credit history shows 35% of adults have never needed to borrow money, while almost 50% have never been refused credit. In terms of gender, women are far more likely (at around 40%) to state that they have never needed to borrow money, compared to just 30% of men.

In terms of age, just 13% of the under 20s have managed to obtain credit, compared to 56% among the population as a whole. This is largely due to the under 18s inability to enter into a binding credit agreement. However, some 61% of this group have never needed to borrow money, possibly because many still live at home with their parents.

The consumers most likely to be "credit-blacklisted" are 25-34 year olds, more than one in twenty of whom are unable to obtain credit. "These consumers may be suffering from the after-effects of credit that was previously readily available, many also lack the stability seen among older age groups, possibly still establishing themselves in a career and thus moving more frequently than the over 35s." comments Toby Clark, Financial Analyst.

Consumers are most likely to apply for credit from the high street institutions, with 25% applying to their current account provider, and 27% to other high street banks or building societies. Credit card (at 18%) and car finance companies (at 15%) also receive a high number of applications. Unsurprisingly, the more specialist companies such as door-to-door lenders received a higher proportion of applications from less affluent consumers, as did benefits agencies.

"That consumers still prefer to apply for credit from a high street provider indicates the continuing importance of a branch network for many consumers, with the visible presence of the network giving the impression of security and respectability. Convenience is also a key factor, with consumers able to speak to an advisor face-to-face" comments Toby Clark.

Changing demographics and social trends will continue to affect the sub-prime lending market. With consistently high divorce rates and growing numbers of single person households, lending opportunities will continue to increase. Changes in funding for students may also impact upon the market, with most leaving university many thousands of pounds in debt.

All articles 2006-22 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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