A report authored by ethical lender Plend has found that one in five Brits – almost 11 million people – feel locked out of the financial system.
The research was conducted by Opinium and included over 4,500 respondents. Also taking part in the study were Nationwide Building Society, Nationwide Incubator, StepChange and Responsible Finance.
Securing affordable credit can be key for the financial stability of an individual. However, the report found that minorities are being let down considerably in this respect – 38% of people from a black ethnic group and 32% from all ethnic groups combined feel that they can access financial services.
The research also found that Covid-19 has made matters worse when it comes to financial exclusion, with over a quarter – 28% – claiming they are now in a worse financial position due to the pandemic.
Currently in the UK, 62% of respondents claim they are using a form of credit, the average amount borrowed through a loan was £8,200, while men borrowed more than women – at £9,952.32 to £6,346.57 respectively.
Loans are one of the main forms of credit which people most often struggle to pay off, with 50% of respondents stating they had found it a struggle, compared to 37% of BNPL users and 38% of people with credit cards. Those from ethnic minorities also fared poorly against the national average, with 69% struggling with repayments.
Data from the report also found that nearly half – 47% – of those with a high-cost loan simply pay back the minimum payments each month with 10% unable to manage even the minimum payments.
The report also found that only 41% of adults know their credit score with 60% reporting that they don’t know how credit scores are calculated.
Plend CEO and co-founder Rob Pasco said, “It’s outrageous to find that financial discrimination and exclusion is on the rise, which has a detrimental effect across society as whole and widens the poverty gap. Having a thin or invisible credit file is just one of the reasons many people are financially excluded from accessing affordable credit products and basic financial services – the lending industry has failed to address this problem at time when the need has never been greater due to the cost-of-living crisis”
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