A new report has revealed that a new generation without a credit rating are springing up, as more and more adults rely on their parents to take out finance on their behalf.
The research carried out by credit report firm, Noddle, has shown that an increasing number of grown up children have persuaded their parents to borrow money for them, which means no entry on their credit file.
Contrary to popular belief, never having held a credit card or repaid a loan does not mean you are guaranteed to be accepted if you apply in the future. Lenders like to see that you have a record of repaying what you borrow and a blank credit file makes them nervous and less likely to give you the thumbs up.
However, the study from Noddle has shown that parents are taking out all kinds of finance agreements on behalf of their grown up kids, including mobile phone contracts, loans and even mortgages in some cases.
The situation is being caused by young adults who are unable to obtain credit in their own name, particularly since the banks tightened up their lending criteria. But continuing to have no credit file means as they get older and move into a better paid job, the chances of being agreed still remain slim, as their file is blank.
The report from Noddle calculated that as many as four out of ten adults aged under 30 have no credit file entries, almost six million adults in the UK and a total of 12% of the general population. A spokesperson for the credit firm said that although parents may be trying to help their children, in the long run their offspring could face a ‘big financial disadvantage,’ because of their lack of finance applications.