Adding insult to injury: consumer experiences of being denied credit

To inspire confidence in consumer credit and improve outcomes for consumers, negative experiences such as being denied credit must be handled appropriately. We conducted an online survey with 298 UK citizens who had a credit application denied to gain a better understanding of their experience of being denied credit. We found that privacy issues make this experience more upsetting for consumers than necessary. When being denied credit, respondents are most concerned about (1) being denied credit ‘in public’; and (2) not being informed about the reasons why they are denied. Only 23% of our respondents knew why they had been denied; 116 (62%) believed they had been denied credit because of their credit record, but 28% had never checked it. Out of the 194 respondents who had checked their record, 38 identified errors in their credit reports, and in 14 of these cases (38%) debts that they had paid off were incorrectly listed as outstanding. Based on our findings, we propose several changes to the credit application process: (1) providing sensitive but helpful information in a private manner, e.g. a preview of their credit score before they commit a loan application; (2) credit denial notifications with information on what to do next; and (3) giving applicants more information about checking their credit report and who to contact for correcting errors.