A new report from the Centre for Responsible Credit (CfRC) argues that the UK’s affordability crisis is being driven not by lack of access to credit, but by the widespread use of credit that households cannot realistically afford to repay.
According to ‘In the Balance: Consumer Protection and Credit Exclusion in the Affordability Crisis’, millions of low- and middle-income households are already struggling under unaffordable borrowing, despite concerns from some parts of the financial inclusion sector that tougher affordability checks could restrict access to credit.
Drawing on five waves of Bank of England/NMG household debt survey data between September 2023 and March 2026, the report finds little evidence to support suggestions that affordability rules are excluding large numbers of consumers from credit. Instead, it estimates that more than 70% of low- and middle-income households have used consumer credit over the last two and a half years, indicating that access to credit remains widespread.
The research highlights significant concerns around affordability. It estimates that around 3.5 million low- and middle-income households with credit cannot afford both essential living costs and their credit repayments, with an estimated 2.6 million trapped in this position on a persistent basis. The report suggests that around 1.5 million households are making severe sacrifices, including cutting back on food and heating, in order to keep up with repayments.
CfRC also argues that much of the problem is occurring within mainstream regulated lending, including credit cards, overdrafts and personal loans. The report estimates that approximately 1.15 million households were extended additional credit despite already facing budget shortfalls, raising questions about the effectiveness of current affordability assessments and wider consumer protection measures.
While acknowledging that some consumers may face difficulties accessing affordable credit, the report concludes that the number at risk of being unfairly excluded on affordability grounds is significantly smaller than often suggested. It estimates that between 262,000 and 626,000 households could fail affordability assessments depending on product design, and argues that better-designed low-cost products could address many of these cases.
Among its recommendations, the report calls for stronger affordability testing, earlier identification and referral of financially distressed consumers to debt advice, greater investment in low-cost and interest-free alternatives through credit unions and community lenders, and reforms to debt write-down and insolvency arrangements for households facing persistent financial hardship.