'Credit-score company encouraged me to borrow again when I was nearly debt-free'

Credit cards have never been more popular - about 35 million people in the UK have one, according to industry figures. The annual percentage interest rate, or APR - including fees and charges - can range from 0% to more than 60%. But for people with an average credit history it is typically about 25%.

Panorama has also spoken to people who say their lenders nudged them towards taking on new debts, despite the fact they were struggling financially.

One man told us how his bank had increased his credit limit, even though he had racked up almost £7,000 of debt during a manic episode linked to bipolar disorder. Another man described how he is now selling his home, after becoming overwhelmed by credit card debt when work dried up and his marriage broke down.

The woman with a £10,000 debt, mother of five Amanda - who receives universal credit and has requested anonymity - went to a debt charity for help. It took years, but Amanda says she got on top of her debt.

She had signed up with credit-score provider Experian and, like many people, thought checking her credit score was a responsible thing to do.

"It was really useful. I'd get the monthly alert of the status of my financial affairs," she says.

Credit agencies such as Experian gather data on customers based on information including their debt levels, number of credit applications, and whether they pay their bills on time.

A better credit report means someone could be offered the most competitive interest rates and may find it easier to borrow - however the decision about whether to offer credit is made by each individual lender.

As Amanda came closer to paying off the last of her credit card debt, she says Experian started sending her more than just monthly credit report updates: "It would be offers in the lines of, 'your credit card approval rate has increased', inviting you to look at lenders."

Amanda says she was sent emails with "constant" offers for high-interest, so-called credit builder cards, which allow customers to improve their credit scores if debts are paid on time.

But, typically, these cards have higher interest rates, meaning that those making only minimum repayments are likely to be paying off their debt for a long time.

"I thought I'll just have the one [credit card], keep it as an emergency," Amanda told us. "But the minute you take out one, you get more emails, again, to apply for another one, and another one and another one."

What Amanda didn't know was that agencies such as Experian - the UK's biggest credit-rating agency - are also paid commission to promote credit card lenders' products.

More than half of nearly 3,500 low- and medium-income adults who responded to a new survey by the Centre for Responsible Credit - a research, policy and campaigning group - said they had received credit card marketing from their credit-score providers.

Half of those asked felt they had been offered more credit than they could afford, while a quarter had felt pressured into taking out more credit.

Experian told Panorama it gives its customers "as much information as possible to help them access credit they can afford".

It said that it helps people "understand their options for switching existing debt to lower or 0% interest options, helping people repay sooner and for less".

Experian added that it works closely with debt charities and that "getting the right support is the most important step and should be the priority over your credit score".

Concerns have also been raised about vulnerable borrowers having their credit limits increased without asking.

Tom Richardson, an academic who researches debt and mental health, says his own experience left him shocked. He has bipolar disorder, and about a year ago, during what he describes as a severe manic episode, he walked into his local guitar shop.

"I just came in for a bit of a look. There wasn't anything in particular I wanted," he says.

However, by the time he left the shop, he had bought a guitar, a ukulele and another piece of equipment. He then went online and bought more, putting everything on his credit card.

"Electric guitar, speakers, guitar pedals, a guitar amp, a trumpet, some sort of bongos, some pads for my computer music equipment," he recalls buying.

"When you're manic, when you're impulsive, it just doesn't feel like real money."

By the time the episode ended, he says he was close to his card's £7,000 credit limit. With help from family, he started to pay the balance down and told his bank, Santander, about his medical diagnosis.

Six months later, Santander increased his credit limit to £9,000.

"I was trying to do the sensible thing and reduce the debt," says Tom, "and the default response was to offer me more credit. It was mind-boggling."

His experience is not unusual, research suggests. Four in 10 credit card holders across all lenders were offered a limit increase in the past year, with little distinction made between those struggling and those not, a survey by debt charity StepChange found.

Santander told us that when Tom first signed up to his credit card, he opted in to automatic credit card limit increases. The bank said it monitors "customer spending closely against past transactions in order to spot any unusual and unaffordable behaviour".

Another risk for those trying to get out of debt lies in how credit card repayments are structured.

One 2018 study by the regulator - the Financial Conduct Authority (FCA) - found 1.6 million people only paid the minimum amount each month, typically between 2-5% of their outstanding balances.

However, if this minimum payment percentage is less than the monthly interest rate, the debt will grow - even if the card holder stops using their card for spending.

This can dramatically extend how long a debt lasts and how much interest is paid.

The credit card industry profits from something called "anchoring", says Grace Brownfield, from National Debtline, an independent debt advice charity.

By displaying a minimum payment amount on bills, it encourages many consumers to subconsciously identify that as the ideal payment amount, in effect anchoring what they pay to the suggested figure.

"There's some evidence that that encourages people to only make the minimum repayment, even if they could afford to pay more than that," says Brownfield. Because of this, she says, people are paying more in interest typically. "That's where the credit card companies are… making their money."

Screenwriter Michael Crompton says credit cards became a financial lifeline during years of freelance work.

"They were offered to me left, right and centre," he says. "I used them as a back-up."

He ended up with £21,000 of debt across three cards.

When his work started drying up he began only paying "a minimum" amount - he wasn't paying off any capital. Over time, lenders repeatedly raised his credit limits.

Then, when his marriage ended, the debt became overwhelming.

"I was paying hundreds of pounds a month and not touching the balance," he says. "It just escalates and escalates. You feel like a failure, and you don't know who to tell."

The FCA estimates about 2.8 million people across the UK are in persistent credit card debt, which is defined as - over 18 months - paying more in interest and charges than the amount they have borrowed.

That number of people has fallen slightly since 2018, FCA data shows, when rules came in requiring lenders to check potential customers' affordability and credit history.

But critics argue the changes have not gone far enough. James Daley of consumer group Fairer Finance says lenders should intervene earlier when spending patterns suggest a customer is in distress, rather than extending their credit limits.

The FCA says its reforms on persistent debt and affordability, introduced in 2018, now save borrowers £1.3bn a year. "Lenders should only provide credit to people who can afford to repay," it says, adding that it is currently reviewing the rules, and will "not hesitate to act" if it identifies issues.

UK Finance, which represents lenders, says credit-card providers are committed to lending responsibly and "comply with strict regulatory rules to assess affordability when agreeing borrowing limits".

It also said "support is provided by lenders to those at risk of, or in, financial difficulty".

Tom says he still owes about £5,000, while Amanda is trying to keep on top of her finances.

Michael - who is 66 - is selling his home and hopes to pay off his debts so he can retire debt-free.

"I know it's my responsibility," he says. "But when you're struggling, the last thing you need is more credit. What you need is someone to say: 'Stop and get help.'"

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