Experian finds loan searches increase 101%, with loan applications increasing 69%

New analysis from Experian finds that comparison searches for loans have doubled over the last year, while consumer research reveals that almost one in five Brits (18%) intend to, or already have, borrowed money in 2022.

When comparing this January with the same month in 2021, loan searches increased by 101%, while loan applications increased by 69%.

Consumers suggest debt consolidation (21%) was the main reason to borrow, followed by the rising cost of living (19%). However, further analysis of consumer application behaviour suggests some could be enticed by headline loan rates, leading them to making unfavourable credit decisions.

Data from Experian Marketplace showed the number of people selecting loan products they are pre-approved for fell by 5% in January 2022, when compared with November 2021. While subsequently, clicks for products with low headline rates grew by 6% over the same time frame.

Being pre-approved for a product means that you are guaranteed to be accepted for it if you apply, subject to identity and fraud checks.

Understanding headline rates

Nearly one fifth (18%) of those surveyed said they didn’t understand that a headline rate might not be available to them. Headline rates are the advertised deals consumers see when searching for credit products online. However, these rates may change following a credit check – and can often be much higher. By law, only 51% of successful applications must be granted the headline rate.

In fact, nearly half believed they would be able to secure the best rates for loans they see advertised online (47%). Rates are usually personalised to an individual, with the results of a credit check a key factor assisting a lender’s decision on whether you’d be accepted, and the rate you’ll be offered.

James Jones, Head of Consumer Affairs at Experian says: “Headline representative rates are an indication of the lowest rate available with a lender, but providers only need to offer their headline rate to 51% of successful customers. The remaining 49% can be offered a different deal. Therefore, if you’re looking to take out credit you should always seek out products that are either pre-approved or include guaranteed rates and limits.

“Our latest analysis reveals an increased demand for credit, in many cases because consumers are taking control of their finances and looking for better deals. However, some are looking to borrow to help with their day-to-day living costs, which might not be sensible.

“In all cases, we urge consumers to borrow wisely and make sure they take the right steps to apply for the right products suited to their needs. This means knowing your credit score, checking your eligibility, and applying for products that you are likely to be granted.

“If you’re falling behind on multiple debts, further credit is unlikely to help and the sooner you reach out for expert support the better. Don’t be tempted to take out further credit if you’re already in trouble because borrowing more at this stage is only likely to make your situation worse. Free, professional, confidential help is available from several reputable services including National Debtline, Citizens Advice, Payplan and StepChange.”