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Think tank Demos has published the third annual ‘Good Credit Index 2021’. It combines publicly published data, geospatial data, and private data to show how the area you live in affects your ability to get affordable credit. Registry Trust data from the Register of Judgments, Orders and Fines is used to identify the impact of County Court Judgments (CCJs) on credit scores in different Local Authority areas.

The report states that CCJs and insolvencies are two indicators which are statistically significant in bringing down credit scores. The report also concluded that effective Government and regulatory interventions during the pandemic maintained household incomes, reduced the need for credit, and stopped credit scores ‘dropping off a cliff’ - indeed credit scores, on average, improved compared to last year.

However, it also highlights that, despite the current government support including the job retention and job support schemes, eviction ban, payment deferrals and the £20 Universal Credit uplift, there is still a group of the poorest and most vulnerable households that have accrued more debt and who are likely going to experience further hardship when support ends without the right safeguards in place. It says that the stark geographical inequalities shown in the Index, alongside the uneven impact of the pandemic across the country, is likely to make this situation worse.

Key findings include:

*Credit scores improved on average by 2.02% in 2021 compared to 2020. This is likely to be related to payment holidays, the protection of credit scores and lockdown interventions designed to protect consumers.

*Though average credit scores have improved further since 2020, we can expect to see greater need for credit as the longer-term effects are felt.

*The local authorities scoring highest and lowest on the credit score subindex have not changed from previous years, indicating a lack of progress in poor-scoring areas, with a clear North-South divide, and the South East seeing generally higher scores.

*Importantly, the report concludes that the ‘average picture’ of credit has never been less helpful. In other words, looking at average or typical levels of debt and financial vulnerability are not particularly helpful if we want to understand the realities experienced by households and communities. Specific households and communities can face very different experiences depending on where they live, health factors, local economic conditions, and access to fair and affordable credit.

At Registry Trust, our mission is to share our ‘public data for the public good’. Data will be critical if we want to develop effective policies to support households as the economy recovers from the effects of Covid-19. If we want to promote financial inclusion and resilience, a blanket approach will not work. Policies need to be targeted at those households and communities most affected. Good data shines a light on where problems are worst. Registry Trust data is one of the best real-time sources of granular data on the state of household finances.

Read more about the Good Credit Index 2021 here and find out about how Registry Trust data is used by think tanks and others in this type of research, and by credit reference agencies in determining credit scores, here. We will be exploring the relationship between CCJs, insolvencies, and credit scores further through our ongoing data analysis work.

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