Centrepoint calls for crackdown on credit companies targeting young homeless people

A survey of 100 homeless young people found almost a quarter had been sent promotions offering store cards, credit cards and catalogue credit. The survey was carried out for homelessness charity Centrepoint and published in a report on 6 April.

The charity is urging the government to clamp down on lenders and credit card companies that, it says, target young homeless people because they cannot get credit elsewhere.

Missing out on benefit payments also pushes homeless young people to use credit, says Centrepoint. The report Too Much, Too Young called for the speed and accuracy of housing benefit decisions and payments to be improved.

More than 80% of the young homeless people surveyed were in debt. On average they owed £1000 but one had £15,000 of debt. One-third of those surveyed for the report said they were suffering from stress, illness and depression because of their debts. Many were using the most expensive forms of credit, such as store cards, to take out cash because cheaper options were not available to them. Lenders often increased borrowing limits on overdrafts and store cards, for instance, without consulting the customers.

Anthony Lawton, Centrepoint’s chief executive, said: “It is clear that products should not be promoted to young people who lenders know to be living in hostels, or who they know to be homeless.

“Our research identified five key reasons why young people get into debt: low incomes, problems with benefit administration, poor financial literacy, lack of access to affordable credit and the amount of credit they are tempted with at such a young age.

“At a time when rising debt levels are causing concern for society, it is important that these vulnerable young people are adequately protected and supported.”

At present, the Financial Services Authority’s code of practice only states that companies should take care when marketing products at young people, but no specific code exists that covers lending to youngsters.

The report criticised credit companies for failing to distinguish between those who won’t pay and those who can’t pay. Of the young people surveyed, 17% said they had been harassed into paying debts.

The report also identified debt as a potential barrier to young people hoping to move out of homelessness or into education. A poor credit rating could prevent them getting their own home after leaving a hostel or disqualify them for a student loan.