Salad Money Impact Report 22-23 WEB - Flipbook - Page 22
MAKING DATA WORK FOR
PEOPLE: OUR 2023 REPORTS
OFFER UNIQUE EVIDENCE
TO POLICYMAKERS
1 The credit information market
should represent all consumers. But,
as the Financial Conduct Authority
has acknowledged, the traditional
approach fails many. Flaws in credit
scoring contribute to the “poverty
premium” and harm access to
a昀昀ordable credit.
Our Credit Where It’s Due report was
based on a retrospective analysis
by one of the UK’s three main credit
reference agencies (CRAs) into
50,000 Salad Money applicants’
loan records. It demonstrates how a
weakness in CRA data contributes to
poor outcomes for people who are
昀椀nancially under-served, vulnerable
or have low 昀椀nancial resilience.
1
2
2 Seven out of ten UK adults
believe it’s unfair for someone’s
postcode to have a negative impact
on a credit score, according to
Opinium Research, whose 昀椀ndings
were published in our joint report
with Responsible Finance. More than
half of adults think it’s unfair that not
having an existing credit history has
a negative impact on a credit score.
We and other social purpose lenders
called for an automatic “social
credit score” to expand access to
a昀昀ordable credit and end the issue
whereby social purpose and not-forpro昀椀t lenders can pay up to 75 times
more to Credit Reference Agencies
per loan they write than banks
which serve ‘prime’ customers. The
concept (which we submitted to the
FCA’s consultation) would reduce
costs for credit for many consumers.
3 Gambling is common among
昀椀nancially vulnerable people,
problem gambling is increasing, and
some people use credit to fund their
addiction.
Our Harmful Gambling report was
based on analysis of over 100 million
昀椀nancial transactions from more
than 77,000 people who had applied
for credit (we only lent to 5,300;
many were declined because of their
gambling). It showed:
• One in eight people spend more
than £500 per month (at least
a quarter of their income) on
gambling.
• Gambling transactions are not
visible to credit reference agencies
so their data is a weak predictor of
excessive gambling.
• It is easily identi昀椀ed using Open
Banking, but since many lenders
do not use this technology,
there are numerous examples of
gamblers funding their addiction
with credit they should not be able
to access.
3
FLAWED
CREDIT
WHERE
IT’S DUE
A review of Credit Reference
Agency data compared with
Open Banking analysis
MORE THAN YOUR SCORE™
3
22
June 2023
Credit where it’s due
HARMFUL
GAMBLING
BUILDING FINANCIAL
INCLUSION WITH A
BETTER APPROACH TO
CREDIT SCORES
Using 昀椀nancial data to understand
patterns of problem gambling
MORE THAN YOUR SCORE™
3
February 2023
Harmful Gambling
Read all our reports at
ww.saladmoney.co.uk/news
Fair Lending for Key Workers
