With the UK experiencing the unexpected hike in inflation in January 2025 to 3%, TransUnion, a global information and insights company, is releasing previously unseen research that reveals one in five (20%) UK adults – the equivalent of 11 million people – would consider themselves financially vulnerable.  

According to the FCA, financially vulnerable consumers are susceptible to harm, due to their personal circumstances, including poor health, life changes like new caring responsibilities, or difficulty handling financial or emotional stress.ii In fact, the data from TransUnion shows the impact of money worries on mental wellbeing, with nearly seven in 10 (68%) financially vulnerable people feeling stressed when dealing with their finances.

James Robinson, managing director of consumer interactive at TransUnion in the UK, said: “With the economic climate looking like it could remain uncertain throughout 2025, many people in the UK are turning to borrowing to help manage their money and make ends meet. With a fifth of UK adults considering themselves to be financially vulnerable, responsible lending is critical. Access to credit products tailored to their needs can empower financially vulnerable consumers to avoid unmanageable debt and build financial resilience.”

The cost of living remains high, with inflation still above the Bank of England’s 2% target. In this climate, more than a quarter (26%) of UK adults are relying on credit cards to meet shortfalls in their monthly finances, while 16% dip into their overdrafts.

Meanwhile, 15% of UK adults borrow money from friends and family in order to be able to afford their monthly expenses, whilst over one in 10 (12%) turn to Buy Now, Pay Later (BNPL) services. Overall, one in 10 (10%) adults report that they wouldn’t be able to maintain their current lifestyle without credit or financing options.

Indeed, this reality was reflected in TransUnion’s Q4 2024 Consumer Pulse data, where since the previous quarter, consumer optimism has dropped a whopping 9% among middle income families (those earning between £30,000 - £79,999), falling from 57% who were optimistic about their household finances over the next 12 months to 48%. Low income families (those earning under £30,000 annually) remain the least optimistic, with only 37% stating they are optimistic about their household finances over the next 12 months, highlighting the continued strain on more financially vulnerable households.

However, many more struggle to consistently access credit, with 9% indicating having been turned down within the last 12 months. 35-44-year-olds (18%) were the most likely age demographic to have a credit application rejected.

The most common reason people said they were turned down for when looking to borrow money, is a low credit score (33%) – a demonstration of the importance of understanding and regularly monitoring your credit report.

One probable factor affecting credit scores is that almost one in five adults (19%) admitted to finding it hard to keep track of their monthly payment commitments across all of the financial products they use. Meanwhile, a quarter (25%) of UK adults reported that their provider didn’t believe they could afford to repay their debt, or that they had borrowed too much already.

James Robinson continues: “It is crucial that financially vulnerable customers are offered care and support to make informed credit decisions and improve their financial wellbeing. As part of our mission to use information for good, we leverage vulnerability and affordability insights, enabling lenders to provide access to lower-cost credit and preventing borrowers from falling into problem debt.”

TransUnion’s commitment to ‘Information for Good’ drives financial inclusion through responsible lending to ensure each consumer is reliably and safely represented in the marketplace. As part of this commitment, TransUnion announced that they were the first CRA to partner with the Vulnerability Registration Service, giving their clients access to an independent register of vulnerable individuals, helping them to identify vulnerabilities and make informed decisions in alignment with regulatory guidance.