One in three adults affected, with issues rising fastest among young and higher-earning borrowers
More than 16 million adults in the UK have experienced some form of adverse credit, including missed payments, credit card arrears, county court judgments (CCJs) and formal debt arrangements, according to new research from specialist lender Pepper Money.
The latest edition of Pepper Money’s Specialist Lending Study reports that 30% of UK adults – about 16.6 million people – have encountered adverse credit, the highest level recorded since the study began nine years ago.
The findings indicate that credit strain is no longer concentrated among lower-income households. Almost half (49%) of people earning more than £100,000 a year say they have had adverse credit at some point, compared with 35% of those earning under £50,000. Over the past 12 months, 24% of six-figure earners missed at least one payment, against 9% of adults in the lower income band.
The study also reports that graduates and postgraduates are more likely to have repayment issues and CCJs than those without formal qualifications. The report suggests that access to larger credit lines, combined with existing tuition fee debt, is increasing exposure to financial risk among groups who are often regarded as more financially secure.
Younger adults appear to be feeling the greatest pressure. In the 18–24 age group, 21% missed a payment in the last year, compared with 3% of those aged 55 and above. Over a three-year period, 28% of young adults have missed a credit card payment, with the proportion declining steadily by age to 4% among over-55s.
The study points to higher living costs, early-career or insecure employment, limited savings and lower financial confidence as key challenges for younger borrowers at the start of their financial lives.
The research also suggests that credit issues are becoming more frequent. Of those who have experienced adverse credit, more than half – around 9.26 million people – have done so in the last three years.
In the past 12 months, 5.57 million UK adults missed at least one bill or repayment. Of that group, 67% went on to miss further payments, up from 46% a year earlier, indicating that an initial missed bill is increasingly part of an ongoing pattern rather than a one-off event.
Participants in the study highlighted the cost of living as a key driver of debt. Almost a third (31%) cited sustained increases in everyday expenses as the main reason for their borrowing. A further 20% pointed to unexpected costs such as vehicle repairs or urgent work on the home.
The findings also note that many adults are providing financial support to family members, including adult children, often without professional advice. Rather than being primarily driven by discretionary spending, the report suggests that many households are struggling to cope with multiple rising costs at the same time.
“Adverse credit can impact us all, with higher earners reporting higher instances of experiencing adverse, it is increasingly a feature of modern financial life,” said Paul Adams (pictured right), sales director at Pepper Money. “These figures show just how close many households are to credit difficulty.
“Rising costs, irregular earnings and shifting borrowing habits are pushing millions to miss payments, which can lead to defaults and CCJs, including customers who have never struggled financially before.
“As adverse credit becomes more common, customers need more choice, not less. Together, brokers and specialist lenders can provide that choice and help people rebuild financial confidence, repair their credit, and continue their next step in homeownership.”
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