One in four Brits are rely on credit to cover essential spending, new research shows, in a worrying sign for the consumereconomy.
And one in 10 customers admit they have exaggerated their income in a desperate search for new loans.
Tink, the open banking data group, says a survey of 1000 UK borrowers - those who hold either a mortgage or loan - suggest that asignificant number of Brits today need to find a way to bridge the gap between income and expenditure each month.
Nearly one in three (29%) respondents run out of money before the end of each month, many are using credit (25%), instalment ordelayed payment options (23%), and loans (16%) to cover essential costs.
These squeeze on finances seems bound to hit spending on leisure, travel and other parts of the consumer economy.
Tasha Chouhan, UK Head of Banking and Lending at Tink, said: “With many traditional credit checks making it difficult for people to gain access to loans, those who most need financial support are resorting to desperate measures. By prioritising investments in data-driven lending models, lenders can make more informed credit decisions to widen credit access to those who can afford it, while protecting struggling borrowers from getting into financial distress.”
Tink says that lenders report that they are turning down an increasing number of loan applicants since they don’t meet affordability criteria.
That has led to an increase in people going to unregulated lenders, it warns.
While the UK has so far stayed out of recession, a downturn could make matters worse, financial advisers warn.
