Consumers with ‘thin files’ could be hit worse by an economic downturn

Thin file credit reports are when consumers have a limited credit history which can make it difficult for them to get credit or be approved for a loan.

This research was carried out by Experian ahead of Credit Awareness Week, which runs between March 12 and 16, and the full results will be revealed at a Parliamentary Reception on March 13.

Credit Awareness Week is a consumer-facing campaign ran in partnership with Credit Strategy, which aims to empower people to improve their financial futures.

Experian found that there are at least four million consumers in the UK with ‘thin files’, but 1.2 million of these consumers are in categories where their household income is forecast to contract over the next few years.

These people are working and earning but often struggle to make ends meet each month and would be among the most affected by an economic slowdown.

Steve Thomas, managing director of strategy at Experian UKI, said: “A person’s credit report is one of the factors lenders consider when they decide whether to accept a credit application. It can be thought of as a borrowing CV, which demonstrates someone’s financial track record. Where there is little information on a person they are considered to have a ‘thin file’, while some people have no information at all. The obvious ‘thin file’ impact is low credit score and limited borrowing options, certainly at competitive interest rates.

“By becoming more financially aware, people can make choices which are more sustainable, no matter what happens in the economy around them. Building a strong credit history takes time, but there are things you can do for free to improve it – such as registering to vote and using eligibility services to shop around without damaging your credit record. Checking your current credit score is also an easy – and free – first step.”

The entirety of Experian’s research will be revealed at the Parliamentary Reception on March 13, as part of Credit Week, a series of conferences, meetings, and industry networking. These findings will also be published in Issue 229 Credit Strategy.