Credit Awareness Week is back for its second year and is once again led in partnership by Credit Strategy and Experian. Tom Blacksell, B2B managing director at Experian, looks at the role credit awareness can play in making better choices.
Promoting a better understanding about how the credit economy works and improving financial awareness, so that people can take control of their financial situation with positive, proactive decisions, is absolutely vital.
This is encapsulated in our financial education programmes. In partnership with Young Enterprise, we have created 28 Centres of Excellence for schools to support children’s financial education. And we have created the UK’s first free online teaching resource to help children develop their financial knowledge and abilities.
Credit Awareness Week is, then, a natural place for us to continue that focus. To take that conversation more widely, to our industry partners, for us all to consider how we might find better ways of working, and drive better outcomes for our customers.
There’s no doubt that we are living through a period of significant financial uncertainty. At times like this it is important that consumers are aware of all the options available to them from a financial perspective. And we believe your credit score is one of the first things you should look at.
It’s perhaps surprising then that our annual Credit Awareness Week consumer survey found that public awareness of credit and how it can be used to help with day to day challenges still remains relatively low, despite some signs of improvement – potentially driven by the widespread availability of free score services.
The percentage of people who said they know their current credit score went up from 22% to 26%, while 47% have ever checked their credit report, up from 45% last year. However, there is still much misunderstanding coming through.
Some 39% of those surveyed wrongly believe their own credit score can be affected by a previous resident of their address having a poor credit score, while 14% think, incorrectly, that checking their own credit report and score has an impact on their credit rating.
More than a quarter (26%) are also wrong to believe having a high income can affect their score. The number of people who believe that the system needs to provide clearer explanation about how the decision was made when credit is refused has also increased.
What the results of our poll tell me is that more needs to be done in promoting a better understanding about all the options available, like the existence of eligibility and comparison services which are designed to help empower people shop around for better deals and, where credit is concerned, avoid damaging their score while they do so.
So there is work to do in building a better understanding about how credit works, which is something we are committed to and that’s why we are supporting this campaign. To help, Experian and Credit Strategy have brought back an improved ‘credit refusal pathfinder’ tool, to help guide people who apply for credit and get turned down.
I’d encourage everyone, even those of us who think we know this business inside out, to take a look at the tool. And, in the spirit of building greater trust and transparency with our customers, let’s take this opportunity to have a think about what we in the industry can do to make things clearer for people.
Helping them understand how lending decisions are made and empowering them to take control of their financial situation and make better, sustainable choices through affordable access to finance.