Adverse credit hits millions as living costs squeeze

One in Three UK Adults Hit by Adverse Credit as Financial Pressure Spreads

More than 16 million adults across the UK have experienced some form of adverse credit, according to new research from specialist lender Pepper Money, with younger people and higher earners among the groups seeing the sharpest rise in financial difficulties.

The latest edition of Pepper Money’s Specialist Lending Study found that 30% of UK adults — equivalent to around 16.6 million people — have faced issues such as missed payments, credit card arrears, county court judgments (CCJs) or formal debt arrangements. It is the highest level recorded since the study began nine years ago.

The findings suggest that financial strain is no longer limited to lower-income households. Nearly half (49%) of people earning more than £100,000 a year reported experiencing adverse credit at some stage, compared with 35% of those earning less than £50,000. Over the past year alone, almost a quarter (24%) of six-figure earners said they had missed at least one payment, significantly higher than the 9% recorded among lower-income adults.

Graduates and postgraduates were also found to be more likely to experience repayment problems and CCJs than people without formal qualifications. The report suggests that larger access to credit, combined with existing student debt, may be increasing financial vulnerability among groups traditionally viewed as financially secure.

Younger adults are facing some of the greatest pressures. Among people aged 18 to 24, 21% said they had missed a payment within the last 12 months, compared with just 3% of those aged 55 and over. Looking over a three-year period, 28% of young adults reported missing a credit card payment, with that figure steadily declining with age to just 4% among over-55s.

According to the study, rising living costs, insecure or early-career employment, limited savings and lower financial confidence are all contributing to growing financial stress among younger borrowers.

The research also indicates that adverse credit issues are becoming more persistent. More than half of those who have experienced adverse credit — around 9.26 million people — have done so within the past three years.

In the last 12 months, 5.57 million UK adults missed at least one bill or repayment. Of those, 67% went on to miss additional payments, up sharply from 46% a year earlier. The data suggests that missed payments are increasingly part of a longer-term financial struggle rather than isolated incidents.

When asked about the causes of debt, almost one-third (31%) of respondents pointed to the rising cost of living and sustained increases in everyday expenses. Another 20% said unexpected costs, such as car repairs or urgent home maintenance, had forced them to borrow.

The study also found that many adults are financially supporting family members, including adult children, often without seeking professional financial advice. Rather than excessive discretionary spending, the report suggests many households are simply struggling to manage multiple rising costs simultaneously.

Paul Adams, sales director at Pepper Money, said adverse credit is becoming “an increasingly common feature of modern financial life.”, amid the news that adverse credit hits millions due to the rising costs of living.

“These figures show just how close many households are to credit difficulty,” he said.

“Rising costs, irregular earnings and changing borrowing habits are pushing millions of people into missed payments, defaults and CCJs — including customers who may never previously have faced financial problems.

“As Adverse credit hits millionsbecomes more common, customers need more choice, not less. Brokers and specialist lenders can play an important role in helping people rebuild financial confidence, repair their credit profiles and continue their journey toward homeownership.”