Brits have a wider choice of credit cards and loans, because more lenders are returning to the market as the COVID-19 lockdown restrictions ease. Around half of lenders had previously withdrawn products.
Experian’s Credit Barometer shows that at the start of the lockdown, just one in four (25%) people searching for a loan found a product they were likely to be accepted for.1 In addition, 60% of those searching for a loan did not see any offers matching their credit needs.
Currently, 40% of consumers searching for a loan through Experian price comparison service will see a product they have a strong chance of being accepted for.2 Of these, around two-thirds (63%) will be pre-approved, meaning they are guaranteed to be accepted for that product.
Furthermore, the number of people that did not see a single loan product that matched their needs dropped to 38% in July.
The recent rise in consumer eligibility means people’s chances of being approved for a loan is now 60% higher than at the start of the UK lockdown.
Amir Goshtai, Managing Director of Experian Marketplace said: “Analysis from our latest Credit Barometer provides some welcome encouragement for people seeking loans. Eligibility ratings give people an indication of their chances of being approved for a specific credit deal. These ratings are now edging closer to pre-lockdown levels as lenders grow in confidence and start returning to the market, improving consumers’ chances of being approved for credit.
“At the moment, our panel of brands offering loans stands at 79% of what it was pre-lockdown, showing signs of improvement in the credit market.”
Credit card products have returned to the market at a slower rate to loans. More than one in four (26%) consumers did not see a single credit card they were likely to be accepted for at the peak of lockdown, compared to just one in ten (10%) that saw the same result at the beginning of March.
However, acceptance rates for credit cards are beginning to bounce back as over one in two (53%) are now likely to see at least one lender with a strong chance of lending to them, when searching for a card.
Goshtai added: “We understand this is a challenging time for many and not everyone will be in a position to attain credit. But people shouldn’t feel disheartened if they find their chances of being approved for credit are low. The market is changing daily and so is consumer eligibility. By building their credit score, consumers can put themselves in the best position to take advantage when lenders review their eligibility criteria.
“People looking for credit should regularly check their credit score and use comparison services such as Experian’s, to compare credit products until they find the right product for their needs. They can also be reassured that this won’t harm their credit score but give them the knowledge to apply confidently when their eligibility improves.
“And in the meantime, we will continue to work with lenders to understand their risk factors so people are better informed and help consumers share additional information that helps improve their chances of approval.”
As consumers’ employment circumstances began to change through lockdown, Experian added two new questions on employment status and sector for those searching for a loan. These insights give lenders a broader view of an applicant’s affordability, helping them to make more-informed lending decisions.
Experian’s comparison service matches people’s needs with lending criteria to show their likelihood of being accepted, and all without damaging their credit score. People can check their eligibility and compare credit products for loans, credit cards, mortgages and car finance at experian.co.uk.
Here are four tips from Experian on how to boost your credit score:
- Register to vote: As well as enabling you to have your say at the ballot box, registering to vote unlocks several additional benefits. Firms can use the information to quickly and easily confirm your identity, but it can also almost instantly add points to your credit score, because electoral roll registration is seen as a sign of reliability and stability.
- Keep up to date with payments: It’s important that you keep up to date with all your financial commitments as missed payments are bad news for your credit score. If you are struggling to meet payments because of the impact of the pandemic, it’s crucial you speak to your lender as soon as possible. Many lenders are being flexible and offering support – such as reduced payments, payment holidays and credit limit increases – to help their customers through this difficult time.
- Monitor your score: Regularly reviewing your score and checking your eligibility rating before applying for credit products are good habits to adopt early on. Not only will monitoring your score regularly give you an indication of how lenders may view you, but it also allows you to check how your financial behaviours are impacting your score.
- Keep up to date with the market: These are new and uncertain times, so it’s understandable that many may be confused about what the virus can mean for their finances. Our dedicated Coronavirus Hub answers some of the most commonly asked questions and offers advice on payment holidays and managing debt. We’re also regularly updating customers on lender changes in the market and how their chances of being approved have changed through our weekly emails.