Category: North Edinburgh News

New research from the Centre for Responsible Credit shows how concerns around credit scores can prevent people in financial difficulty from seeking help and should be viewed as one aspect of financial health, not the entirety.

Stats from the report show that:

• Credit score concerns stop hard-up borrowers from seeking help: Industry-promoted fixation on credit scores deters three quarters of borrowers from seeking support, making debt problems harder to resolve.
• Credit score messaging pushes people into hardship: A third (32%) of low-to-middle income borrowers; 6.4 million people are going without essentials like food and heating specifically to preserve their credit score.

“Your latest credit score is ready.” It’s a familiar email or app notification from credit score providers such as ClearScore, Credit Karma and Experian.

But it’s part of a marketing culture that could be encouraging low-to-middle income (LMI) borrowers to take on unaffordable credit and prioritise actions that maintain good scores over spending on essentials such as food and heating.

Our new report, Good Score, Empty Cupboard: The credit score trap forcing households to cut spending on essentials explores the role of credit reporting and scoring in detail, finding a third of LMI borrowers have “cut back on day-to-day expenses to preserve” their credit scores.

That is why we are now calling on the newly created Credit Information Governance Body and the Financial Conduct Authority to work with the credit scoring industry and consumer agencies to set standards for marketing dashboards. It’s one of five recommendations set out in this latest report, the second phase of our research in this area. 

The first phase, published in July 2025, comprised qualitative interviews with thirty LMI borrowers. The interviews indicated there is a group of people who are highly sensitive to their credit scores, checking these on a frequent basis.

The frequent checking of scores seems to be encouraged by the many e-mails and app notifications that borrowers receive from credit score providers. When they respond to these and visit their credit score dashboards, they are often exposed to marketing offers for further credit.

Worryingly many participants felt that the best way to improve their credit scores was by taking out more credit and using it regularly. Many were also prepared to make considerable sacrifices to preserve their scores.

The scale of the problem

The second phase of our research involved a large-scale, representative, survey of more than 3,400 LMI adults in Great Britain; conducted on our behalf by Walnut Unlimited. Three-quarters of survey respondents used some form of credit (credit cards, Buy Now Pay Later, overdrafts or personal loans) with 40% using it to pay for daily expenses such as food and bills. 

Most LMI borrowers check their credit scores at least once per month. Just under one fifth (18%) check their scores at least once per week, and an additional 15% do so more than once per month. A further fifth (21%) check their scores monthly.

When they do so, many enter on-line market places where they receive offers of further credit that may not be appropriate. Our survey indicates that over half (55%) of all survey respondents had received suggestions or offers for credit products from their credit score provider. Half of those (49%) felt that the offers they received encouraged them to take on more credit than they could afford, and over a quarter of (28%) reported feeling pressured to accept the offers that were made to them.

Nearly half (43%) of those being prompted to take up offers of credit by their score providers act on the suggestions they receive, but in many cases this results in financial distress within six months.

Around one in five saw their overall level of debt increase, and the same proportion (21%) experienced stress or anxiety. 18% struggled to make the repayments. 18% also cut back their spending on essentials, while 14% had to borrow more to cover the repayments, and around one in ten missed payments or defaulted.

And yet, alarmingly, three-quarters of borrowers said they would not ask for help from their lender. That’s because most people are unsure whether seeking advice or help will harm their credit score.

A disciplinary effect

Our survey also found clear evidence of a disciplinary effect, with one third (32%, equivalent to 6.3 million adults aged over 18) of all LMI borrowers telling us they have “cut back on day-to-day expenses to preserve” their credit scores.

This rises to 45% of borrowers who are using credit specifically to improve their scores, and to 55% of borrowers using credit to pay off other debts.

We also found a statistically significant relationship between the likelihood of cutting back on essentials to preserve scores and the frequency of score checking.

After controlling for age, housing tenure and incomes, over half (52%) of those checking their score more than once per week have cut back on essentials to preserve their score, as have 45% of those checking their score at least at few times per month.

Actions needed

To address the harms our study exposes, we are calling on Financial Conduct Authority, Credit Information Governance Body and credit score providers to ethically re-design, test, and set standards for credit score dashboards and their marketing.

This needs to include a review of dashboard messaging, so that providers don’t promote credit to people already showing signs of financial difficulties. Dashboards should make it clear that maintaining credit scores should not come at the expense of meeting basic needs.

More is also needed to encourage forbearance requests and debt advice seeking by ensuring dashboards proactively identify borrowers in financial difficulties and link these to independent advice and support, and there is a need to limit push notifications and dashboard marketing, to prevent borrowers from focusing on marginal score changes, and only allowing notifications when underlying credit report information has significantly changed.

The cost-of-living crisis has shattered the finances of millions, with more than a quarter of people currently unable to cover their basic expenses. It’s time for credit score providers to take action to make sure their marketing and processes are not compounding the problem. 

The full report is available here. 

Responding to research from the Centre for Responsible Credit, Adam Butler, Public Policy Manager at StepChange, said: “Whilst credit scores can help people understand how lenders may see them, the reality is that they are only one element of what lenders look at when assessing creditworthiness.

“Our research shows that people in financial difficulty often delay seeking help because of worries about the impact on their credit scores.

“This deepens the harm of problem debt and can lead people to take out further credit which exacerbates their financial problems. It’s important to note that seeking free debt advice and exploring options will not have an impact on someone’s credit score.

“The Financial Conduct Authority (FCA) has required the credit information industry to set up a new governance body with stronger consumer representation and make reforms to encourage struggling borrowers to seek help early.

“We want the industry to build on these steps and ensure people can seek help when they need it without fear of punitive credit reporting. As our recent polling found that 18 million people have an outstanding unsecured credit balance of some kind, a credit information system that works well for those who are struggling is vital.”