A survey commissioned by independent credit broker TotallyMoney also found that 11 million people are struggling to keep up with bills and credit agreements.

This is an increase of 3.1 million in just six months, and it was discovered that during the same period, 5.6 million missed payments three or more times.

Inflation may have fallen this month, but the Treasury expects that inflation could jump back up again in August, maintaining the financial pressure on many families.

Financial confidence falling

The research also found that nearly one in five adults are not confident is making financial decisions.

It’s an issue that was more prevalent in the 18-24 age group and the unemployed, where 31% in those categories said that they felt uncomfortable making choices over their financial affairs.

It was also discovered that more women felt unconfident compared to men in making financial judgements.

Many are also wary of seeking any debt advice, as 17% of those asked wrongly believed that asking for help would damage their credit scores.

Credit demand growing

The demand for access to credit is growing in the current climate of high inflation and a growing gap between earnings and expenses.

Yet the survey revealed that two in five adults are uncertain of who credit companies decide who to lend to, while a third of respondents do not understand a credit report at all.

As current regulations require lenders to provide only 51% of successful applicants with an advertised credit card offer, just over 40% of those asked in the survey do not feel that lenders make this clear enough before an application is made.

Recent research from the Financial Conduct Authority found that just 42% of adults have any confidence in the financial services industry as a whole.

Inflation pressure

Alastair Douglas, the CEO of TotallyMoney said: “Inflation is piling pressure on people’s finances, and millions are struggling to manage their money with confidence. They’re missing payments, and with little support available elsewhere, many more are turning to credit to help cover the increased cost of living.

“However, customers don’t know what the information in their credit report means, how banks choose who to lend to, or why they might receive a different offer to the one they applied for.

“Missed payments, rejected applications and credit confusion can have a long term impact on people’s financial wellbeing, forcing them to turn to high cost and unregulated borrowing.”

“The industry needs to be proactive in its approach. It’s kept people in the dark for too long, when they should know what their data means, and how it’s used. They should know how best to apply for products without impacting their credit file, or why a lender has rejected them. We need to build trust, improve transparency, and provide people with the information they need to create financial momentum.”