The UK could unlock up to £7 billion in additional annual GDP and significantly expand access to affordable credit if government, regulators and industry act now to modernise how credit decisions are made, according to a new whitepaper published today by ClearScore, in collaboration with EY and Fair4All Finance.

Published today, the report, 'The Future of the UK Credit Market: How data, technology, and innovation can power inclusive growth', finds that while confidence is returning to the credit market after years of volatility, lending has not recovered for millions of consumers. An estimated 17 million UK adults still have unmet credit needs, representing a £2 billion gap in credit supply, particularly affecting those outside the prime market.

ClearScore’s analysis shows that demand for credit is rising – up 9% year-on-year – but outdated affordability models, incomplete data and ongoing regulatory risk aversion are preventing lenders from meeting that demand responsibly.

Tom Markham, Chief Commercial Officer at ClearScore, said:  “This challenge is not about lowering standards, it is about raising precision. Millions of consumers who could repay responsibly are being locked out by blunt decision-making and outdated data. This is a pivotal moment – if we modernise how credit is assessed, we can unlock growth, improve financial inclusion and build a healthier market for everyone.”

Technology could close the access gap

The whitepaper highlights the transformative role that open banking, artificial intelligence (AI) and product innovation can play in expanding access to credit without increasing risk.

ClearScore data shows that up to 60% of consumers currently receiving no credit offers may be creditworthy when assessed using richer data such as open banking transaction information. Where open banking is already used for credit decisioning, marketplace lending volumes have increased by 14%, with some lenders seeing 25% higher approval rates for near-prime borrowers, without higher arrears.

Despite this potential, consumer consent rates for open banking remain stuck at around 30%, limiting adoption and impact.

The report points to a growing alignment between HM Treasury, the FCA and industry around financial inclusion and growth, including the Financial Services Growth and Competitiveness Strategy and the government’s Financial Inclusion Strategy. However, it warns that without clearer guidance on the use of new data and technologies – and continued reform of redress arrangements – investment and innovation will stall.

The forthcoming regulation of Buy Now Pay Later (BNPL) products, while welcome for long-term market health, could further restrict short-term access to credit unless industry-wide improvements are made.

Clear targets for inclusive growth

To ensure progress is measurable, the whitepaper proposes three national outcomes to be delivered over the next three years:

• Reduce the share of underserved consumers from 30% to 20%

• Increase open banking connection rates at point of credit decision by 20 percentage points

• Increase the annual GDP contribution from improved access to credit to £7bn

The report calls on government to champion open banking adoption, on regulators to reduce unnecessary friction and provide clarity on responsible innovation, and on industry to invest in inclusive product design and fairer affordability models.