TransUnion, one of the largest credit reference agencies, has published a report looking at current trends in the UK credit sector.

The company’s UK CEO, opens his foreword by warning credit firms that they need to build trustworthy relationships with their customers, and that if they do not, customers will have no hesitation in complaining about the way their personal data has been handled.

TransUnion commissioned two surveys during 2019. Each survey covered 2,000 adults in different areas of the UK. The main findings of the surveys were:

  • One person in nine (11%) said they would not be able to maintain their current lifestyle if they were unable to borrow on their credit card
  • Banks that only have an online presence are now attracting considerable new custom. Around one in eight (13%) of participants said they were likely to open a current account with a high street bank in the next 12 months, while as many as 10% said they would open an account with an online-only bank or a banking app. Almost one-third (32%) already have an account with one of these tech-based banks
  • Just over one-third (38%) said they did not know what their credit report contained, while almost one in four (22%) say they don’t understand the approval process used by lenders. When asked if applying for a mortgage requires a credit check to be carried out, more than one-fifth (21%) either said they thought there was no credit check or said they didn’t know if a check would be conducted. TransUnion uses these statistics to call for improved financial education
  • Echoing what Mr Saha said in the foreword, 36% of respondents said trust is an important factor when selecting a finance provider. This might affect competition, with new entrants struggling to build a trustworthy reputation, although the survey shows that younger adults are much more inclined to trust online-only lenders
  • Less than half (44%) said they felt in control of their finances, and more than half (53%) of the 18 to 24 age group said they were not on track to achieve their financial goals
  • Another significant minority (39%) said they would be unable to cope with a financial emergency
  • The credit card market continues to grow. In 2014, an FCA survey revealed three in five (60%) of UK adults had a credit card, but the new TransUnion figures show this has risen to almost three-quarters (74%). Two in five (40%) have two or more cards
  • While 74% have a credit card, the proportion having the following credit accounts was:
    •  Overdraft – 43%
    • First charge mortgage – 38%
    • Car finance agreement – 24%
    • Retail finance – 20%
    • Unsecured personal loan – 18%
    • Loan from a relative – 17%
    • Secured loan – 16%
    • Payday or other short-term loan – 11%
    • Guarantor loan – 9%
  • New entrants are increasing their share of the credit card market, but the sector is still dominated by the four largest firms
  • Almost one-third (32%) said they had never applied for a mortgage. The media often suggest that this is due to younger people struggling to accumulate enough savings to pay a deposit, and 27% mentioned this; but almost as many (25%) did not believe they earned enough to service the likely mortgage repayments. Almost half (48%) of 25 to 34-year olds do not have a mortgage
  • Despite external issues such as Brexit, almost two-thirds (62%) expect their financial situation to remain stable in the next 12 months; and more than half (53%) say they can see how they might be able to improve their financial situation

 

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article