Global information and insights provider TransUnion, one of the UK’s leading credit reference agencies, has found that three out of five (59%) households are already being negatively financially impacted by COVID-19, according to a new study.
This contrasts with research commissioned just before the outbreak for TransUnion’s Consumer Credit 2020 report, where 60% of consumers had stated they had the ability to withstand a financial shock – highlighting that the pandemic is affecting even those that may have previously considered themselves to be protected from this kind of uncertainty.
The latest study shows that 70% of those consumers who feel they are impacted are concerned about paying their bills, and say on average they will be short nearly £600 in the near future. Much of this can likely be attributed to the fact that 39% of those impacted have had their working hours reduced, and the research shows that the impact is being felt across all ages, regions, ethnicity and income levels.
Will North, director of core credit at TransUnion in the UK noted: “These figures give a stark picture of the immediate aftermath of the financial shock we’ve seen following COVID-19, with an indication of some difficult times ahead for businesses as consumers struggle to make ends meet. It’s more important than ever that credit providers have strategies in place to help them assess a customer’s financial standing and to be able to identify quickly those that may be struggling, so they can offer support if needed.”
In the UK, 59% of survey respondents indicated that their household income has been impacted – the same as in the US. However, of those who said they were not currently feeling the pinch, 28% feel it will be impacted negatively in the future.
- 37% of UK respondents say they will delay purchasing a holiday, and 14% were planning on postponing a home purchase
- Of those worried about their ability to pay bills and loans, 59% believe they will be impacted within a month, whilst 34% state they will see this impact between one and three months’ time
- Looking at UK residents who feel they are impacted financially, and are concerned about their ability to pay bills and loan repayments:
- They note utility bills (46%), rent payments (44%) and credit card bills (35%) are the key bills they will not be able to pay
- This subgroup feel, on average, they will be £598.50 short when trying to pay their bills
- To help pay the bills, 35% will dip into savings, and 26% will seek to borrow from a friend or family member. 23% do not know how they will pay their bills or loan repayments.
Acting responsibly, 36% of the consumers impacted financially and concerned about their ability to pay bills have reached out to companies they have accounts with to discuss payment options, but of those who reached out, 46% say the companies have not provided guidance on what their payment options are.
North continues: “It’s really important that there is a dialogue between businesses and their customers at this time of uncertainty. With credit markets in flux, it’s incumbent on lenders and those in positions of trust when it comes to finances to reach out and help customers understand their total credit commitments and broader financial position, offering advice and guidance where appropriate to help them get through this difficult time.”