As the UK grapples with a cost-of-living crisis, a troubling trend has emerged – credit rating agencies are actively encouraging vulnerable consumers to take on more debt, even as they struggle to pay off existing balances.
The story of Amanda, a mother of five receiving universal credit, illustrates this worrying dynamic. After signing up with credit reporting agency Experian to monitor her finances, Amanda says she was bombarded with offers for high-interest “credit builder” cards as she neared paying off her £10,000 debt.
“The minute you take out one, you get more emails, again, to apply for another one, and another one and another one,” Amanda told BBC Panorama. What she didn’t realise is that credit agencies like Experian are paid commissions to promote such products, even to those already in financial distress.
More than half of low- to medium-income adults surveyed by the Centre for Responsible Credit said they had received credit card marketing from their credit provider, with many feeling pressured to take on more debt than they could afford.
Experian defended its practices, stating it aims to provide customers with information to access credit they can afford. However, consumer groups argue the system is skewed to benefit lenders, not vulnerable borrowers.
The problem extends beyond credit agencies. Research suggests 4 in 10 credit card holders are offered limit increases, even for those clearly struggling. One man with bipolar disorder described how his bank, Santander, raised his £7,000 limit to £9,000 – “the default response was to offer me more credit. It was mind-boggling.”
Critics say regulators must do more to force lenders to intervene earlier when signs of financial distress emerge, rather than simply extending credit limits. The Financial Conduct Authority says its recent reforms have saved borrowers £1.3 billion annually, but some argue the changes do not go far enough.
As the cost-of-living squeeze intensifies, vulnerable Britons risk being trapped in a vicious cycle of debt. Charities warn that without stronger protections, the problem will only deepen, leaving many with no choice but to sell their homes just to pay off spiralling credit card bills.