More than 16 million UK adults have now experienced adverse credit conditions, including missed payments, late payments on credit cards, CCJs and debt settlements, Pepper Money reveals.
Paul Adams
Pepper Money’s Specialist Lending Study shows that rising costs of living and financial pressure are driving a sharp increase in credit struggles in Britain, with 30% of British adults experiencing adverse lending, the highest figure since the survey began nine years ago.
The research found that adverse credit conditions are now increasingly common among high earners, with 49% of those earning more than £100,000 reporting adverse credit at some point in their lives, compared to 35% of adults on less than £50,000.
In the past 12 months alone, 24% of six-figure earners have missed a payment, compared to 9% of lower earners.
Graduates and postgraduate students report higher rates of repayment problems and CCJs than those without formal qualifications.
Meanwhile, the report finds that younger generations are disproportionately affected, with 21% of 18 to 24-year-olds having missed a payment in the last 12 months, compared to just 3% of those aged 55 and over.
Over a three-year period, 28% of young adults have missed a credit card payment, declining steadily with age to just 4% among adults over 55.
Pepper suggests the findings highlight the pressures young adults face early in their financial lives, combining higher costs of living, insecure employment or early careers and limited savings, often along with weaker financial literacy.
The data shows that credit problems are increasing and not stabilizing, as more than half of those affected have experienced negative credit situations in the past three years.
The research also found that 5.57 million British adults missed at least one bill or repayment in the past year, while 67% also missed additional payments, a sharp increase from 46% the year before.
The study attributes the rise in adverse credit to several converging pressures felt by consumers.
Nearly a third (31%) cited continued increases in the cost of living as the main reason for being in debt, followed by a fifth (20%) who faced unexpected expenses such as car repairs or home emergencies.
Pepper Money sales director Paul Adams says: “Negative credit can impact us all. Higher earners are more likely to report negative impacts. It is increasingly a feature of modern financial life.”
“These figures show how close many households are to credit problems. Rising costs, irregular income and changing borrowing habits are causing millions of people to miss payments, which can lead to defaults and CCJs, including customers who have never been in financial trouble before.”