One in four economic abuse survivors ‘has had credit rating negatively impacted’
Survivors of economic abuse are often left with damage to their finances that remains with them for years – which could also affect their ability to take out credit in future, according to research.
Economic abuse, sometimes called financial abuse, happens when someone attempts to control another person’s ability to acquire, maintain access to, or use their money.
People may be coerced into taking out debts or they may be taken out in their name without their knowledge.
On average, a survivor of domestic abuse who is left in debt owes £3,272 as a direct result of economic abuse perpetrated by a current or former partner, the Co-operative Bank and charity Refuge found.
One in four (24%) will be left with debts of more than £5,000.
Credit reference agency Experian is now working with the Co-op and Refuge’s campaign to improve the process for survivors to inform lenders that debts were caused by economic abuse.
One in four (26%) survivors will end up with a negatively impacted credit rating as a result of economic abuse, the report suggests.
More than half (57%) of those who had experienced economic abuse said that they were in or had been in debt as a result.
In some cases, these debts come with particularly high interest rates attached to them, such as payday loans or overdrafts, with many overdrafts now charging around 40% interest.
One in four survivors (27%) find themselves struggling financially as a result of economic abuse and 21% will face debts that they are unable to repay, the research found.
For survivors who first experienced economic abuse during the coronavirus pandemic, 32% said they were struggling with debt and 31% could not afford basic living costs.
Maria Cearns, managing director, people and customer, the Co-operative Bank, said: “Something we have learned in our ongoing interactions with vulnerable customers who have suffered some form of economic abuse, is that the ramifications of abuse can continue to have a profound impact on someone’s financial wellbeing for years to come.”
Lisa King, director of communications and external relations at Refuge, said: “The long-term impacts of debt as a result of economic abuse should not be ignored – and action needs to be taken to ensure women are able to rebuild their financial stability and gain economic independence following abuse.”
John Webb, consumer affairs executive at Experian, said: “Survivors of economic abuse may have fraudulent accounts opened in their name, without their knowledge or permission. However, victims of economic abuse can also be coerced to open accounts, which can also be disputed as fraudulent.
“It’s important that survivors of economic abuse can clear up their credit reports, by removing fraudulent accounts, in order to access financial services as they rebuild their lives. Experian can help people dispute any fraudulent accounts with lenders directly, helping to clear up the record for victims of economic abuse.”
The report was compiled from a series of surveys and interviews.