New research finds young people only engage with credit once declined, with brokers best placed to intervene sooner
Nearly half (49%) of young adults in the UK worry their credit history will stop them renting or buying a home, according to research published by financial wellbeing business Loqbox.
The study, which was based on a survey of 2,001 adults aged 18-28, found young people typically only engage seriously with their credit file once they have already been declined for a loan or mortgage – by which point, fixing the problem can take years.
Tom Eyre (pictured top), co-founder and chief executive of Loqbox, told Mortgage Introducer this timing problem is the single biggest misunderstanding he sees among young borrowers. "It is the notion that your credit file or report is only something you need to worry about at the point of application," he said. "To then learn that process can take years to materially change your position is phenomenally disappointing."
The research found 15% of 18–20-year-olds have already been declined for a personal loan because of their credit history, rising to 28% among 27–28-year-olds. Eyre said he expects the true scale to be larger still. "If we expanded that research out to include things like mobile phone contracts – credit applications that are perhaps less obvious than a loan application – I think we would probably even see a larger number of people being declined."
Why does the credit system fail young people?
Eyre was direct about where responsibility lies. "The credit system utterly fails young people," he said. "We have developed a credit ecosystem that benefits those who are already participating in the system and prejudices those who are outside of it." He noted the problem is not confined to the young, with anyone who has not borrowed for six years faces the same reset. "Once you've not borrowed for six years, your credit history goes back to zero again," he said, adding that older borrowers returning to the mortgage market "are facing the exact same challenge as an 18-year-old."
Asked who should be responsible for closing the education gap – government, schools, lenders, or the mortgage industry – Eyre said it has to be shared. "It's a mix of everybody," he said, pointing out that even the usual fallback of family support is often unreliable. "We have been doing a relatively bad job of financial education for long enough now that even parents and siblings may not be in the best possible position to advise."
Should brokers be teaching clients about credit?
Eyre stopped short of calling it an obligation for brokers to teach clients about credit. "I don't believe that they should have to do that," he said. But he sees a clear commercial case for brokers who choose to anyway. "A mortgage broker has a relatively unique and very powerful position in people's lives – trusted, authoritative, expert, there at the right time," he said. "This is a really powerful moment for intervention."
He offered a practical example of what earlier engagement could look like, pairing savings habits with credit-building from the point someone starts saving a deposit. "If every single person who fancies owning a home started putting £100 a month into a Lifetime ISA, and also immediately started thinking about how they might clean up, manage and improve their credit profile, that would be really good for financial inclusion," he said.
Eyre revealed he had recently discussed the issue with a broker, who had shifted his own client outreach earlier in the buying journey. "That was great for him because he was building his pipeline for the future," he said. "But it also meant he was expecting to see the rate of successful applicants increasing over time. That's a long-term bet, but it feels like a pretty safe one to me."
Is the anxiety worse for young people in London?
The research found that worry about credit history blocking a home rises to 53% among young Londoners, against the 49% national average. Eyre said he could not point to hard evidence from the research itself, but suspected the pressure reflects wider economic conditions. "There is an unfair disadvantage today for young people," he said, citing the cost-of-living crisis and house prices that have "massively outpaced" wage growth.
In terms of online misinformation, Eyre said the bigger risk to young UK borrowers is mismatched advice rather than bad advice. "I've spoken to a lot of people who have researched online and have inadvertently consumed information relevant for the US market," he said, noting that outdated guidance – such as recommending a subprime credit card as a starting point – persists even though "lots of people simply are not able to do that".
Asked for one concrete step the industry could take, Eyre pointed to timing over product. "It is about collectively us all putting effort into trying to change the narrative for consumers, so people start speaking to brokers at the point they start thinking about planning for a mortgage, not once they've already found a property to buy."
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
