The Good Credit Index 2021 finds that the financial support provided by the Government during the pandemic, such as furlough, eviction bans and payment deferrals, has provided many households with a vital lifeline, leaving many at huge risk when it suddenly ends.

The third annual Good Credit Index shows an average increase in access to credit in the UK, mostly due to effective government intervention to prevent a financial crisis. The job retention and job support schemes, eviction ban, payment deferrals and the £20 Universal Credit uplift have reduced the need for credit and stopped credit scores dropping off a cliff. However, if the Government pulls the plug on the remaining support in September, as currently planned, it risks many households facing financial crises.

The research finds that, despite the current government support, there is still a group of the poorest and most vulnerable households that have accrued more debt and who are likely going to experience further hardship when support ends without the right safeguards in place. The research also shows that the stark geographical inequalities the Index has found, alongside the uneven impact of the pandemic across the country, is likely to make this situation worse.

The report is calling on the Government to halt plans to simply pull the plug on existing support but instead to set out a roadmap for ending furlough and retaining the Universal Credit uplift, to avoid the real risk of households being plunged into financial crises.

The Good Credit Index 2021, supported by NewDay, a leading UK specialist financial services provider, follows previous indices from 2019 and 2020 and combines publicly published data, geospatial data, and private data provided to Demos to show how the area you live in affects your ability to get affordable credit.

The report also finds that:

  • Credit scores improved on average by 2.02% in 2021 compared to 2020. This is likely to be related to payment holidays, the protection of credit scores and lockdown interventions designed to protect consumers.
  • Though average credit need scores have improved further since 2020, we can expect to see greater need for credit as the longer-term effects are felt.
  • The local authorities scoring highest and lowest on our credit score subindex have not changed from previous years, indicating a lack of progress in poor-scoring areas, with a clear North-South divide, and the South East seeing generally higher scores.

Heather Williams-Taplins, co-author of The Good Credit Index 2021 and Head of Operations at Demos, said:

Our Good Credit Index shows the power of effective government intervention to limit the damage of Covid-19 to personal finances. Government must act now to prevent a full-blown crisis in personal finances as we move out of restrictions and back to ‘normal’. Our annual research also shows the same geographical inequalities repeating year on year – it’s vital that local leaders make building financial resilience a core part of their Covid recovery plans, to truly build back stronger.”

Read the full report here.

Download the full dataset: Excel file/CSV file.