The Gender Credit Crunch: How Women Navigate Financial Rejection

International Women’s Day Spotlight on the Financial Challenges Faced by Women Amid the Gender Credit Crunch

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Key Takeaways:

  • Over a third of women (36%) hesitate to apply for credit due to past rejections, risking financial exclusion.
  • Women are more likely than men to struggle with debt repayment, and the fear of rejection hinders their financial well-being.
  • Addressing gender inequalities in financial services is crucial for empowering financially vulnerable women.

In a revealing study by Fair4All Finance, the not-for-profit financial inclusion organization, it has been discovered that women, once rejected for credit or loans, are more likely than men to perceive “no” as a final verdict. As we celebrate International Women’s Day, the findings shed light on the gender credit crunch, emphasizing the need for addressing financial inequalities faced by women.

Breaking Down the Gender Credit Crunch: A Comprehensive Analysis

Barriers to Credit Applications: The study, polling 3,101 adults across the UK, uncovered that over a third of women (36%) are deterred from applying for credit due to past rejections. This hesitancy is significantly higher than the 30% of men who share the same concern. The fear of facing rejection again acts as a substantial barrier for women seeking financial support.

Debt Struggles and Gender Disparities: Women not only face challenges in seeking credit but also in managing existing debts. The study reveals that 30% of women reported an increase in their level of debt over the last year, compared to 27% of men. Moreover, women are six percentage points more likely than men to struggle with debt repayment (39% vs. 33%).

Seeking Help Disparities: When confronted with financial difficulties, the study indicates that men are more likely to seek debt advice (16%) compared to women (12%). This raises concerns about women’s access to crucial financial support services and highlights the need for bridging existing gender gaps in seeking assistance.

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Navigating Financial Hurdles: How Women Respond to Credit Rejections

Cutbacks and Going Without: After credit rejections, women are more likely than men to make significant adjustments to cope, such as cutting back on essential spending (26% vs. 20%) or going without items or services they need (26% vs. 16%). This underscores the financial resilience challenges faced by women in the aftermath of credit setbacks.

Reliance on Social Networks: The study brings attention to the fact that women, post-credit rejection, are more inclined to seek financial support from family or friends. A notable 34% of women borrowed from their social networks in the last 12 months after facing credit challenges, contrasting with the 22% of men who did the same.

Insights from Fair4All Finance: Urgent Need for Change

Lauren Peel, Director of Marketing, Consumer Insights, and Propositions at Fair4All Finance, emphasizes the urgency of addressing financial vulnerabilities specific to women. She states, “Financial vulnerability can impact anyone but, unfortunately, the path to financial inclusion often discriminates based on gender.”

Emma Goodwin, Deputy CEO of Fair for You, further stresses the importance of supporting vulnerable groups, especially single parent families predominantly led by women. She states, “Fair for You is proud to be part of an inclusive community finance sector, providing a vital service to women across the UK.”

Sheenagh Young, CEO of South Manchester Credit Union, highlights the heightened risk of financial exclusion for women facing challenges such as the motherhood penalty, workplace inequalities, and living in deprived areas.

Case Study: Empowering Women in Finance

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The study also features a case study of Charlotte Birkenhead, a mother of two working in the NHS finance department, highlighting how access to supportive financial services can positively impact a woman’s financial journey.

Conclusion: Striving for Financial Equality

As we commemorate International Women’s Day, the gender credit crunch serves as a stark reminder of the barriers women face in accessing affordable credit. Bridging the gap in financial services and addressing gender inequalities are crucial steps towards empowering financially vulnerable women and fostering a more inclusive financial landscape.

For more information on finding local credit unions or Community Development Finance Organizations, visit Find Your Credit Union and Finding Finance.

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