Credit-Score Firm Encouraged Borrowing: A Close Brush with Debt Freedom

3 hours ago | By Iona Bain, BBC Panorama

BBC

A woman who had accrued £10,000 in credit card debt shared her experience with BBC Panorama, revealing how a credit-rating service that she believed would aid her in managing her finances instead motivated her to acquire more credit. Despite nearing financial freedom, the ratings firm, Experian, inundated her with emails promoting high-interest credit card deals.
With millions in the UK struggling with card repayments, consumer advocacy groups caution that additional credit offers—particularly from credit-scoring entities—might exacerbate problems for those already financially vulnerable. In response, Experian informed Panorama that it's developing a system to spot potentially vulnerable clients to cease sending them marketing material. They argued that the offers presented to the woman could have facilitated faster or cheaper debt repayment.
Credit cards are increasingly popular, with approximately 35 million holders in the UK. Interest rates, represented as the annual percentage rate (APR), can vary widely, from 0% to over 60%; the typical APR for those with average credit is around 25%.
Panorama heard from individuals who claimed that lenders pushed them toward new debts despite personal financial challenges. One man shared how his bank had expanded his credit limit even after he accumulated nearly £7,000 in debt during a manic episode linked to bipolar disorder. Another man is selling his home, overwhelmed by credit card debt following job loss and a marriage collapse.
Amanda, a mother of five with a £10,000 debt, collects universal credit and prefers to remain anonymous. She sought assistance from a debt charity. Over several years, Amanda successfully managed her debt, partly due to her subscription with Experian, which she believed was a prudent move.
Expressing her sentiments, Amanda noted, 'It was really beneficial. I’d receive a monthly update on my financial status.' Demonstrating to BBC the emails from credit-score firm Experian, she highlighted how these agencies gather customer data, including debt levels, credit applications, and bill payment punctuality.
Upon nearing the end of her credit card debt, Amanda noticed an increase in communications from Experian, not only providing her regular credit report updates but also featuring proclamations such as, ‘your credit card approval rate has increased,’ inviting further borrowing opportunities. She received 'constant' solicitations for high-interest credit builder cards, typically aimed at improving credit scores if used responsibly, albeit often incurring higher interest rates.
'I thought I'll just keep the one [credit card] for emergencies,' Amanda narrated. 'But once you take one out, more emails flood in, urging applications for more.' Unbeknownst to many, Experian—as the UK's preeminent credit rating agency—also earns a commission by promoting credit card lenders' products. According to a recent survey by the Centre for Responsible Credit, over half of nearly 3,500 low- and medium-income adults reported receiving credit card marketing from credit-score providers, with many feeling pressured to accept more than they should.