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

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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, significantly higher than the European average (31% excluding the UK), and 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

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.”