Eleven million people (around 20 per cent of UK adults) consider themselves financially vulnerable as money worries significantly impact mental wellbeing, according to information and insights company, TransUnion.
In its report, TransUnion found that 68 per cent of financially vulnerable people feel stressed about dealing with finance. Consumers are finding themselves in a tough spot as the Financial Conduct Authority (FCA) has identified that this stress can pile on to existing issues and make consumers susceptible to harm.
There are a variety of factors that could propel someone to despair about their finances, including poor health, life changes like new caring responsibilities, or difficulty handling financial or emotional stress. The severity of these life changes is heightened when you take into account that the cost-of-living is still high and 26 per cent of UK adults rely on credit cards.
In fact, while inflation remains above the Bank of England‘s two per cent target, 16 per cent of UK adults have admitted to dipping into their overdrafts to meet shortfalls in monthly finances. Meanwhile, 15 per cent of UK adults borrow money from friends and family in order to be able to afford their monthly expenses, whilst over one in 10 (12 per cent) turn to Buy Now, Pay Later (BNPL) services. Overall, 10 per cent of adults report that they wouldn’t be able to maintain their current lifestyle without credit or financing options.
Consumer optimism dropping
This reality was reflected in TransUnion’s Q4 2024 Consumer Pulse data, where since the previous quarter, consumer optimism has dropped nine per cent among middle income families (those earning between £30,000 – £79,999), falling from 57 per cenrt who were optimistic about their household finances over the next 12 months to 48%.
Low-income families (those earning under £30,000 annually) remain the least optimistic, with only 37 per cent stating they are optimistic about their household finances over the next 12 months, highlighting the continued strain on more financially vulnerable households.
However, many more struggle to consistently access credit, with nine per cent indicating having been turned down within the last 12 months. Thirty-five to 44-year-olds (18 per cent) were the most likely age demographic to have a credit application rejected.
The most common reason people said they were turned down for when looking to borrow money, is a low credit score (33 per cent) – a demonstration of the importance of understanding and regularly monitoring your credit report.
One probable factor affecting credit scores is that almost one in five adults (19 per cent) admitted to finding it hard to keep track of their monthly payment commitments across all of the financial products they use. Meanwhile, a quarter (25 per cent) of UK adults reported that their provider didn’t believe they could afford to repay their debt or that they had borrowed too much already.
TransUnion’s role
TransUnion’s commitment to ‘Information for Good’ drives financial inclusion through responsible lending to ensure each consumer is reliably and safely represented in the marketplace. As part of this commitment, TransUnion announced that it was the first CRA to partner with the Vulnerability Registration Service, giving their clients access to an independent register of vulnerable individuals, helping them to identify vulnerabilities and make informed decisions in alignment with regulatory guidance.
James Robinson, managing director of consumer interactive at TransUnion in the UK, said: “With the economic climate looking like it could remain uncertain throughout 2025, many people in the UK are turning to borrowing to help manage their money and make ends meet. With a fifth of UK adults considering themselves to be financially vulnerable, responsible lending is critical.
“Access to credit products tailored to their needs can empower financially vulnerable consumers to avoid unmanageable debt and build financial resilience.
“It is crucial that financially vulnerable customers are offered care and support to make informed credit decisions and improve their financial wellbeing. As part of our mission to use information for good, we leverage vulnerability and affordability insights, enabling lenders to provide access to lower-cost credit and preventing borrowers from falling into problem debt.”
