Millions of people in the UK are being put off accessing credit products because they fear a rejected application could harm their chances of a loan in the future, new analysis from Freedom Finance has indicated.

FCA data shows that more than one in 10 (11%) of those who held at least one consumer credit product in the last 12 months had been put off by the “fear of rejection”.

According to Freedom Finance, over half (58%) of people have feared the impact of a rejected application, with 46% saying it could damage their credit score and a third (32%) saying it could have affected their chances of applying to that provider in the future. Furthermore, the research found that many (48%) simply felt that there was no point in applying.

The analysis by the online consumer lending platform also revealed that 7% of people had seen a credit application rejected over the past 12 months. The most vulnerable were again most likely to miss out as 14% of people with low financial capability, 29% with low financial resilience and over 11% who had suffered from negative life events, all suffered loan rejections.


As a result, 12% of respondents said they had sold something to get by instead of applying for a loan or as result of rejection, while one in seven (14%) borrowed from a family or friend. and 5% defaulted on another bill, loan or repayment agreement.

Commenting on the findings, Freedom Finance chief marketing officer, David Hendry, said the findings show a huge number of people are struggling to access the credit markets, and suggested that for many the application is a “daunting process”. 

“This is particularly true for people with thin credit files – often through no fault of their own, with circumstances like divorce or living abroad factored in – or with low financial capability,” Hendry said. “It is vital however that the financial services industry does not pull up the ladder and abandon these people to loan sharks and unregulated lenders.

“Credit plays a vital role for many people and used in an appropriate way can help reduce expensive, drawn-out debt or to improve their wider financial wellbeing.

“Technology allows people to apply for credit with the confidence that they will be eligible for that product, but we have to make sure everyone is able to access the right tools. The industry and regulator needs to make sure that we are taking a holistic view of individuals’ credit profile through open banking, and not blocking people from loans unnecessarily.”

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