Young adults’ finances have been hit hardest by the pandemic, and they are increasingly willing to share their bank transaction data to get access to financial products that can help them weather the storm, according to the latest findings from the Credit Kudos Borrowing Index.
Under 35s are three times more likely to have seen their income negatively impacted by the pandemic than older people (36% compared to 13% of over 55s). This fluctuation in income over the previous year has made it difficult for lenders to ensure they are lending responsibly without up-to-date information on someone’s financial situation. However, at the same time financial products that can help mitigate temporary shortfalls, like credit, are increasingly needed - younger adults are far more likely to say they ‘have never needed credit more’ (26% compared to 6% of over 55s).
Despite this demand, the under 35s are nine times more likely to have been turned down for borrowing since the pandemic began. Almost one in five (18%) of adults aged 18-34 say they have been turned down for credit since March 2020, compared to just 2% of people aged 55. 57% of under 35s who have been turned down for credit since March 2020 believe it was due to a lack of information on their credit report, but 58% were not told why or how to improve their chances of being accepted.
In order to ensure lenders can offer affordable credit, responsibly, to those who need it, lenders not only need current information but more comprehensive information. Open Banking helps lenders get a much clearer, up to date, understanding of a borrower’s financial situation, allowing people to prove their creditworthiness and increase their chances of being accepted. As a result, under 35s are increasingly likely to be willing to share their bank transaction data in this way if it could help them be accepted for a loan – increasing 21% since May 2020.
To read more, download the full Borrowing Index here.