Financial abuse, credit scores and the need for context

Recent weeks have seen coverage concerning financial abuse and the efforts being made to improve support for survivors. If you missed it, Iona Bain reported on the subject for BBC’s Morning Live on 13th January (available on i-player here: starts 13 minutes 30 seconds in).  A little over a week later (21/01/2026) UK Finance announced that a further eight lenders had signed up to their Financial Abuse Code, bringing the total to thirty-three. The Code now covers 90% of all mortgage lending.

The Code was first launched over seven years ago, but has been refreshed several times since. It commits mortgage lenders to encouraging the disclosure of financial abuse; engaging effectively with victim-survivors, and supporting with debts: including by providing appropriate forbearance and, where possible, separating finances between customers where joint banking relationships exist.    

The commitments in the Code are very welcome, as has been the excellent, and ongoing, campaigning efforts of Surviving Economic Abuse. Working alongside survivors and other cross-sector partners, their work has led to the inclusion of commitments to help tackle financial abuse in Government’s Violence Against Women and Girls Strategy and the Financial Inclusion Strategy, both published in late 2025. These include taking actions to address joint mortgage abuse, coerced debt and the impact on credit scores, as well as family court reform.

Credit reporting and the need for context

Our particular interest lies with the reporting of coerced debts and the impact this can have on survivors’ ability to access credit after leaving abusive relationships. In this respect, the Financial Inclusion Strategy (p.31) noted that:

“…the largest Credit Reference Agencies (CRAs) –Experian, Equifax, and TransUnion – lenders and trade associations are working in collaboration with the third sector to develop an approach to improve the way coerced debt is reflected on victim-survivors’ credit files. This will include consideration of how lenders should report data on affected files to CRAs, depending on the circumstances of the victim-survivor, with the aim of reducing detriment and making it easier for victim-survivors to access products in future.”

However, implementing a context-responsive reporting system for survivors of financial abuse- one that takes account of the factors giving rise to their debts- is far from straightforward. As our recent Good Score, Empty Cupboard report has highlighted, the current credit reporting architecture is centred around lender priorities and ignores the wider contexts that underpin many missed payments and defaults. Ignoring context is hard-wired into its design: excluding borrower voices about the causes of their financial difficulties, while credit scoring reduces complex human circumstances to a single numerical value that serves profitability classifications rather than fair assessment. The current system also disciplines borrowers into maintaining profitable behaviours, often with negative welfare impacts. A third of low-to-middle income (LMI) borrowers have cut back on essential spending to preserve their scores, and concerns about their scores is deterring many from seeking help.

Importantly, most LMI borrowers recognise the current system as unfair. Their experiences of temporary job loss, periods of ill-health, and problems with benefit administration, all go ignored. When asked, a clear majority (72%) believe score providers should consider these wider reasons for missed payments.  The same percentage would be willing to share these personal details if it would improve their score.

Lender behaviours

Lender behaviours are also important. Whether a lender has followed the Financial Abuse Code or the more general guidance provided by the Financial Conduct Authority with respect to the treatment of vulnerable customers, has a significant bearing on outcomes. Poor staff training, collection cultures, and lack of flexible reporting practices all play their part. So too, do lending practices more generally. For many LMI borrowers, the unsolicited hiking of credit card limits and refusal of appropriate forbearance to those in financial difficulty are causal factors determining their ability to repay and their willingness to remain engaged. Despite this, lender behaviours are currently invisible within our credit reporting system.

Reimagining the credit file

There are different ways in which the credit reporting system can respond to the need for borrower context and lender accountability.

With respect to financial abuse, greater flexibility could be provided to lenders when reporting coerced debts and payment histories. In this scenario, survivors first engage with their lenders, providing the context surrounding their debts. Following investigation, lenders are then able to amend the information on the credit file, restoring the survivors ability to access credit moving forward. This approach requires standardisation of lender practices but the amending of credit records already happens, for instance in cases where the Financial Ombudsman upholds a complaint about irresponsible lending. This approach shouldn't be too much of a technical stretch for the industry, and it also has the benefit of ensuring that disclosures of financial abuse are not transmitted across the reporting system for other lenders to see.

Nevertheless, it also has some pitfalls: it relies upon survivors contacting their lenders; on lender determination of whether coercion has taken place, and subsequent lender action to ‘clean up’ credit files if they agree that it has. None of those lender decisions will be made visible, and so the power to control the future financial opportunities of abuse survivors will remain in their hands. The approach also limits regulatory oversight of industry practices, which could remain highly variable. While 90% of mortgage lending is now covered by the Financial Abuse Code, there are likely to be considerable differences in how lenders apply it. There also doesn't appear to be much monitoring of the outcomes being achieved, for example how many cases of financial abuse are being reported each year, and how many are resulting in positive action. Similarly, problems are apparent in the consumer credit market. Last year's Financial Conduct Authority assessment of the treatment of vulnerable consumers revealed some good practices being followed by firms, but there is considerable room for improvement.

An alternative would therefore be to allow borrower contexts to directly enter credit files, and for these to also incorporate lender responses. This fundamentally reimagines the credit file as a living document that accepts data inputs from both sides of the relationship. Data regarding outstanding balances, missed payments, etc. remain in the file, but this is supplemented by borrower perspectives about the reasons behind these, and, critically, by information about how lenders responded to their difficulties. In my forthcoming book, I argue that this approach is vital to rebalance power in the credit relationship and to build trust, which is essential for the system as a whole to function effectively. But while it would encourage borrower engagement, help lenders make better decisions and improve regulatory oversight, it is clearly better suited to the disclosure of factors such as benefit delays and short periods of ill-health rather than highly sensitive issues such as financial abuse.  

A means of protecting consumers who need to make sensitive disclosures is therefore required. We need to explore how high-level contextual disclosures (e.g., relationship breakdowns) and lender responses to these can be transmitted through the system, while ensuring more detailed logs of sensitive information are held in more secure areas of the file. That data could subsequently be anonymised to safeguard borrowers, but released to regulators for thematic analysis.

This is not as much of a technical stretch as might be initially thought. Indeed, some important steps have already been taken on which this approach can be built. For example, Experian has created a ‘Support Hub’: a channel for consumers to report changes in their personal circumstances, such as relationship breakdown, bereavement, gambling addiction, and long-term health conditions. This contains a log of the disclosures made and provides for these to be shared with participating lenders.

However, this contextual information is currently siloed and managed separately from credit histories and scores. While lenders can use the information to adjust their customer service (e.g., “like changing statements to Braille”, freezing credit card limits, and blocking gambling transactions) they are currently prohibited from using the support-need information “for marketing or deciding about whether to provide you with a product or service.” Using the Support Hub also has no effect on credit scores.

This siloed approach makes little sense. The contextual information being provided could, in many cases, help lenders make more accurate lending decisions; for example, by giving them a better understanding of a person’s credit history, as well ensuring they provide timely forbearance for those reporting circumstances that are likely to impact repayment abilities. By storing support-needs data and credit information in separate silos, lenders and reporting agencies can mask hardship and swerve their Consumer Duty responsibility to avoid foreseeable harm.

Finding a way forward

Efforts to address the harms caused by financial abuse have exposed a much wider truth: our credit reporting system cannot remain blind to context. The need to reflect the lived realities of borrowers — and to recognise the role lender behaviours play in shaping outcomes — extends far beyond cases of financial abuse. If we are serious about creating a fairer, more accountable system, we must move beyond one‑way surveillance of borrowers and make lender actions visible too. Doing so would help restore reciprocity, rebuild trust, and enable more accurate, humane lending decisions. But this transition requires more than technical tweaks; it demands a transparent, collaborative discussion between regulators, lenders, consumer groups and the credit reporting industry. Only by openly confronting the system’s current limitations — and by embedding safeguards to protect those making sensitive disclosures — can we build a credit reporting framework that genuinely supports financial recovery, reduces harm, and reflects the complexities of people’s lives.