Description
Providing the most comprehensive and up-to-date information and analysis of the UK Credit Monitoring market, including the behaviours, preferences and habits of the consumer.
During the first national lockdown from the COVID-19 pandemic saw the highest monthly falls on record for the credit sector. The closure of non-essential businesses and financial uncertainties throughout 2020 saw a huge decline in consumer spending and credit supply. However, heading out of the pandemic, credit score checking is predicted to continue to increase as consumers measure the impact the pandemic has had on their finances.
47% of adults say they check their credit score at least once a year, rising from 31% in 2016. Because of this increasing usage, applying for credit is now no longer the most common reason for checking credit scores, with consumers using it as a way of measuring their financial security as a whole.
The credit monitoring sector will continue to see impressive growth in the long-term, with more and more people checking their credit score as the economy recovers from the impact of the pandemic. The biggest current threat to the industry, however, is the preference of free credit monitoring over paid-for services. With 80% of people agreeing that free-to-use credit monitoring is suitable for their needs, companies will need to innovate ways to convince users to pay for services.
Read on to discover more details or take a look at all of our UK Financial Services market research.
Quickly understand
- The impact of COVID-19 on the credit monitoring market.
- The frequency of checking credit scores among consumers, and how this has changed compared to 2016 and 2018.
- Awareness and use of main brands in the market.
- Reasons to check credit scores.
- Perceptions of different types of services such as free, paid-for or provided by banks or third parties.
- Consumer attitudes, including towards data security and the use of credit scores when comparing insurance or utility providers.
Covered in this report
Brands: Experian (CreditExpert), ClearScore, MoneySavingExpert (Credit Club), Credit Karma, Equifax, UK Credit Ratings, Capital One (CreditWise), TotallyMoney, CheckMyFile, Klarna.
Expert analysis from a specialist in the field
Written by Irene Salazar, a leading analyst in the Financial Services sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.
The credit monitoring market continues to show impressive growth, largely driven by frequent users. Applying for credit is no longer the main reason to check credit scores, with a growing number now using these services as an indicator of financial wellbeing or to check for fraudulent activity. COVID-19 has the potential to increase engagement as consumers assess the impact of the disruption on their personal finances, access personalised deals and take control of their data in order to improve their prospects in the medium and long term.
Irene Salazar
Senior Financial Services Analyst
Table of Contents
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Overview
- Key issues covered in this Report
- Impact of the January lockdown and the vaccination rollout
- Economic and other assumptions
- Products covered in this Report
-
Executive Summary
- COVID-19 disruption to personal finances offers opportunities for growth
- Figure 1: Short, medium and long-term impact of COVID-19 on credit monitoring, 18 January 2021
- The Market
- Use of credit monitoring services continues to grow, driven by regular checkers
- Figure 2: Use of credit monitoring services, 2016-20
- Consumer credit hits record lows as lockdown hits spending
- Figure 3: Monthly changes of net consumer credit lending, October 2015-October 2020
- Temporary support for borrowers puts pressure on lenders to treat customers fairly
- Companies and brands
- Experian remains the best-known brand, but ClearScore continues to gain ground
- Figure 4: Use and awareness of selected credit check and monitoring services among credit score users, November 2020
- Experian Boost leverages Open Banking to build fairer scores
- ClearScore Protect taps into data security concerns
- NatWest Group pioneers bank-backed free access to credit scores
- COVID-19 disrupts advertising and marketing
- Figure 5: Total above-the-line, online display and direct mail advertising expenditure by credit monitoring companies, 2015/16-2019/20
- The consumer
- Disruption to household finances could boost interest in credit scores
- Figure 6: Impact of COVID-19 on household finances, 8-13 January 2021
- More than one in four regularly check their credit score
- Figure 7: Use of credit monitoring services, November 2020
- Younger age groups and those disrupted by COVID-19 are a key group for growth
- Figure 8: Likelihood of checking credit scores, by impact of COVID-19 on finances, November 2020
- Applying for credit is no longer the top reason to check credit scores
- Figure 9: Reasons to check credit scores, November 2020
- Opportunity to attract users of less common types of credit
- Figure 10: Reasons to check credit scores when applying for credit/finance, November 2020
- Free services are deemed to meet most customers’ needs
- Figure 11: Perceptions of credit monitoring services, November 2020
- Importance of data security likely to increase as COVID accelerates shift to online
- Figure 12: Attitudes towards credit monitoring services, November 2020
- Huge potential for services beyond credit
- Figure 13: Potential for extending credit monitoring services, November 2020
- COVID-19 disruption to personal finances offers opportunities for growth
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Issues and Insights
- COVID-19 disruption could increase engagement and drive growth…
- …and highlights the importance of real-time data
- Building the habit among younger generations is key for expansion
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The Market – Key Takeaways
- Regular checkers drive impressive growth
- Difficult economic climate to continue impacting the market
- Regulatory pressure on lenders to treat customers fairly
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Market Size
- COVID-19’s disruption of personal finances offers opportunities for growth
- Figure 14: Short, medium and long-term impact of COVID-19 on credit monitoring, 18 January 2021
- Use of credit monitoring services continues to grow…
- Figure 15: Use of credit monitoring services, 2016-20
- …driven by regular checkers
- Figure 16: Population estimates of consumer use of credit monitoring services, 2016-20
- Innovation and product development are key for future expansion
- Learnings from the last recession
- COVID-19’s disruption of personal finances offers opportunities for growth
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Market Drivers
- Rising unemployment will impact creditworthiness
- Figure 17: Unemployment rate (November 2020 central forecast), 2015-25
- Consumer credit hits record lows as lockdown hits spending…
- Figure 18: Monthly changes of net consumer credit lending, October 2015-October 2020
- …and disrupts the property market
- Figure 19: Monthly changes of net secured lending to individuals, October 2015-October 2020
- COVID-19 leads to spike in individual insolvencies
- Figure 20: Individual insolvencies in England and Wales, by type, January 2019-October 2020
- Brexit deal likely to improve confidence, but uncertainty remains
- Rising unemployment will impact creditworthiness
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The Regulatory Environment
- Temporary support for borrowers shines light on credit scores…
- …putting pressure on providers to treat customers fairly
- New advertising rules for Buy Now Pay Later schemes
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Companies and Brands – Key Takeaways
- Experian remains the best-known brand, but ClearScore continues to gain ground
- Experian Boost leverages Open Banking to build fairer scores
- ClearScore Protect taps into data security concerns
- NatWest Group pioneers bank-backed free access to credit scores
- COVID-19 disrupts advertising and marketing
-
Awareness and Usage of Credit Score Brands
- Experian remains the best-known brand…
- …but ClearScore continues to gain ground
- Figure 21: Use of selected credit check and monitoring services among credit score users, November 2020
- Smaller brands face awareness challenges
- Figure 22: Awareness and use of selected credit check and monitoring services among credit score users, November 2020
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Competitive Strategies and Innovation
- Experian Boost uses Open Banking to help consumers improve their scores
- ClearScore Protect monitors the dark web for stolen passwords
- NatWest Group pioneers bank-backed free access to credit scores
- Capital One to revamp its CreditWise service
- Exploring the potential beyond credit
- TotallyMoney ventures into car finance and energy switch
- Credit Karma in the US tackles ‘every step of the financial journey’
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Advertising and Marketing Activity
- Advertising in the recovery period
- Adspend falls sharply in 2019/20
- Figure 23: Total above-the-line, online display and direct mail advertising expenditure by credit monitoring companies, 2015/16-2019/20
- Experian continues to be the highest spender
- Figure 24: Total above-the-line, online display and direct mail advertising expenditure by credit monitoring companies, by brand, 2015/16-2019/20
- TV is the dominant channel for ATL advertising
- Figure 25: Total above-the-line, online display and direct mail advertising expenditure by credit monitoring companies, by media type, 2019/20
- Nielsen Ad Intel coverage
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The Consumer – Key Takeaways
- COVID-19 disruption can boost demand for credit monitoring services
- People are more likely to check their credit score than not
- Applying for credit is no longer the top reason to check credit scores
- Free services are deemed to meet customers’ needs
- Huge potential for services beyond credit
-
Impact of COVID-19 on Consumer Behaviour
- COVID-19 has disrupted the finances of millions of households
- Figure 26: Impact of COVID-19 on household finances, 8-13 January 2021
- Confidence mimics lockdown trajectory
-
- Figure 27: The Financial Confidence Index, January 2016-January 2021
- Deterioration of household finances could boost interest in credit scores
- Figure 28: Changes in household finances, January 2016-January 2021
- COVID disrupts debt repayment intentions
- Figure 29: Actual and planned debt activity, January 2016-January 2021
- COVID-19 has disrupted the finances of millions of households
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Use of Credit Monitoring Services
- More than one in four regularly check their credit score
- Figure 30: Use of credit monitoring services, November 2020
- 25-34s are the most engaged age group
- Figure 31: Use of credit monitoring services, by age, November 2020
- More than one in four regularly check their credit score
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Likelihood of Checking Credit Scores
- Young people are a key group for growth
- Figure 32: Likelihood of checking credit scores, November 2020
- COVID-19 disruption can lead to more people checking their scores
- Figure 33: Likelihood of checking credit scores, by impact of COVID-19 on finances, November 2020
- Young people are a key group for growth
-
Reasons to Check Credit Scores
- Applying for credit is no longer the top reason to check credit scores
- Concerns about fraud provide an opportunity to increase frequent use
- Figure 34: Reasons to check credit scores, November 2020
- Majority have more than one reason to check scores
- Figure 35: Repertoire of reasons to check credit scores, November 2020
- Opportunity to attract users of less common types of credit
- Figure 36: Reasons to check credit scores when applying for credit/finance, November 2020
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Perceptions of Credit Monitoring Services
- Free services are deemed to meet customers’ needs…
- …while paid-for services are associated with more complexity
- Figure 37: Perceptions of credit monitoring services, November 2020
- Bank-backed services are best placed to tackle the security angle
- Importance of lack of bias could be explored when extending services
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Attitudes towards Credit Monitoring Services
- Majority are happy with a free service…
- …but there’s room to build relationships with more than one brand
- Figure 38: Attitudes towards credit monitoring services, November 2020
- Importance of data security likely to increase as COVID accelerates shift to online
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Potential for Extending Credit Monitoring Services
- Huge potential for services beyond credit
- Figure 39: Potential for extending credit monitoring services, November 2020
- Huge potential for services beyond credit
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Appendix – Data Sources, Abbreviations and Supporting Information
- Abbreviations
- Consumer research methodology
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