'Credit-score company encouraged me to borrow again when I was nearly debt-free'

The Debt Trap: How Credit-Rating Services and Lenders Fuel Financial Distress

A woman with £10,000 in credit card debt has told BBC Panorama how a credit-rating service, which she initially hoped would help her manage her finances, actually encouraged her to take on more debt.

Experian, one of the UK’s leading credit-rating agencies, reportedly bombarded "Amanda" (who requested anonymity) with emails promoting high-interest credit cards just as she was beginning to pay off her balance. While millions of people in the UK struggle with card payments, consumer advocates argue that credit-scoring companies are making matters worse by marketing products to the most financially vulnerable.

The Rise of "Credit Repair" Marketing

According to industry figures, credit cards are at peak popularity, with approximately 35 million people in the UK holding at least one. While those with average credit scores face interest rates (APR) of around 25%, vulnerable borrowers are often targeted with "credit repair" cards, which can carry interest rates exceeding 60%.

Amanda, a mother of five, signed up for Experian to stay informed about her financial health. However, as her approval rating improved, the marketing intensified.

"I assumed I’d just have the one card for emergencies," she said. "But if you miss a payment, you get more emails to apply for another one, and another one."

What many users do not realise is that credit-rating companies often earn commissions from lenders for every customer they successfully refer.

Barriers to Debt Recovery

The investigation highlighted several systemic issues that prevent people from clearing their balances:

The "Anchoring" Effect: Debt advice charities note that lenders often "anchor" customers to the minimum payment on their statements.¹ If this payment is lower than the monthly interest accrued, the debt will continue to grow even if the cardholder stops spending.
Automatic Limit Increases: Many borrowers report that their credit limits were raised without their consent, even after informing banks of financial hardship or mental health struggles.
Mental Health Vulnerability: Tom Richardson, an academic with bipolar disorder, shared how his credit limit was raised from £7,000 to £9,000 by Santander shortly after he had spent thousands during a manic episode—despite his family informing the bank of his condition.

Persistent Debt in the UK

The Financial Conduct Authority (FCA) estimates that 2.8 million people in the UK are in "persistent debt"—defined as being in debt for more than 18 months and paying more in interest and charges than toward the original principal.

What can I do if I can't pay my debts?

If you are struggling to keep up with repayments, it is vital to take action as early as possible. Here are the recommended steps:

Contact Your Lenders: Under UK regulations, lenders are required to treat customers in financial difficulty "fairly and with forbearance."² They may be able to freeze interest or set up a manageable repayment plan.
Seek Free Debt Advice: Do not pay for debt advice. Contact reputable, free organisations such as StepChange, National Debtline, or Citizens Advice.
Check Your Benefits: Ensure you are receiving all the financial support you are entitled to by using a benefits calculator or visiting a local advice centre.
Avoid New Credit: While "credit repair" offers may seem like a way to improve your score, they often lead to a cycle of high-interest debt that is difficult to break.
Breathing Space Scheme: In England and Wales, you may be eligible for a "Breathing Space," which gives you 60 days of legal protection from creditors to allow time to seek professional advice.³