Britain’s “IOU Ostriches” could face future financial disappointment


Half of UK adults claim to have a great credit history – but have never checked their credit report so may be overestimating their creditworthiness

Many misunderstand the factors that do and don’t affect credit ratings


London, UK. 27 February 2015: One in two UK adults (47%) is an “IOU Ostrich” –  believing themselves to have a strong credit history, but burying their head in the sand when it comes to understanding the reality, running a real risk of future financial disappointment.


According to independent research commissioned by Experian1, the global information services company, seven out of 10 of Britons (71%) believe they have a good or excellent history of managing credit. But two thirds of these (66%), equating to almost half the UK population2, have never actually checked their credit report or score3 – and many appear to be managing their borrowing in a way that could be damaging their credit rating.


With a fifth (21%) planning to buy a new home in the next 18 months, they could therefore be set to miss out on the most affordable rates or even risk failing to secure a mortgage full stop.


With so many people apparently misinformed about how to manage credit well in the eyes of lenders (see below), Experian has launched a series of online guides to help demystify the credit referencing process and help people take control of their finances.


According to the research, further common characteristics of the IOU Ostrich include:

1.    Ever-increasing levels of borrowing

More than a quarter (27%) owe more than they did this time last year, with just 16% having made significant reductions in their borrowing. Lenders look at whether potential customers’ borrowing is increasing or decreasing over time and may be less likely to extend credit to those who appear to be taking on more than they can afford.

2.    Newly-opened credit accounts

A fifth (18%) have taken on a new credit or store card in the last six months. Although this may eventually increase their credit score, by increasing their amount of available unused credit, in the short term it is likely to lower their score until a lender can assess how well they are managing the new credit they’ve been given.

3.    Repaying the bare minimum

One in 10 (11%) are making only the minimum repayments on their cards each month. As well as increasing the total amount they will pay back overall, lenders may also worry this is a sign they are struggling to meet their credit obligations each month.

4. And sometimes failing to repay even that

7% of these IOU Ostriches have late or missed payments recorded on their credit report. Just one or two missed payments, even if simply due to absent mindedness, is likely to have a negative impact on how lenders view an applicant for up to six months, and will remain recorded on a credit report for up to six years. Significant missed payments or arrears on an account could result in account being categorised as ‘delinquent’, which can have serious repercussions on someone’s ability to borrow.

Behind this are some widespread misunderstandings about the credit referencing process – which could perhaps be banished if people took time to check and understand their credit reports. These include:


  • 15% don’t know that missed payments can damage their credit score, when it is one of the key factors that lenders look for, as it can suggest you are struggling to repay what you already owe;
  • 44% don’t know that making multiple credit applications in a short period can harm their credit score, as lenders can see this as a sign of financial stress or desperation;
  • A quarter (24%) assume that having a good salary means a good credit score –suggesting many IOU Ostriches may not realise the importance of demonstrating a strong track record of using credit responsibly, assuming instead that their good salaries will sway lenders’ decisions;
  • 44% wrongly believe that making just the minimum payments will improve how lenders view them. The reality is likely to be the opposite.


Commenting on the research, Julie Doleman, Managing Director, Experian Consumer UK&I, said: “Understanding how to properly manage your credit accounts and knowing what lenders look for when reviewing a credit application is the key to building an excellent credit score. We understand that people can find the topic confusing, but the good news is that it is possible for everyone to take control. Today we have launched a new series of guides: Credit Referencing and You, Your Credit Journey and Demystifying Credit Scoring that have been designed to demystify credit referencing and help people take greater control of their credit rating, and get the credit they deserve and can afford to repay.”


Visit, Experian’s new credit education hub, to find lots of insight and resources to help you take control of your credit rating. You can also follow the journeys of Becci Burt, Steven Ellins and Paul Holland – three people who plan to turn around their financial situations this year with expert help and advice to help them Make It Happen in 2015.