Affordability is no longer static: How lenders can stay ahead in a changing landscape
Affordability isn’t static: Why the way affordability assessments are conducted has fundamentally changed
Accurate affordability assessments have always been central to responsible lending. But as consumer finances become more complex and less predictable, the environment in which lenders operate is fundamentally different from the one in which traditional affordability checks were built.
Where a static, point-in-time view of a person’s affordability may once have been sufficient to make a lending decision, the picture is now much more multifaceted, shaped by:
Income volatility: As more people take on freelance work, 0-hour contracts or commission-based roles, not every person’s income looks the same each month.1
Cost of living pressure: Energy shocks, supply chain disruptions and food inflation driven by macroeconomic volatility are changing the way people spend — or don’t spend — their money as many households feel the pinch.
Short-term and flexible credit: The ways in which consumers access credit is also changing, with some opting for short-term or flexible credit options like buy now, pay later (BNPL) instead of more traditional credit products.
At the same time, regulatory expectations are evolving. Lenders are now required to demonstrate not only decisions are sound but they lead to fair and sustainable outcomes.
Therefore, in order to meet regulatory requirements, better serve consumers and optimise business growth, lenders must first acknowledge affordability is no longer a point-in-time calculation. Instead, it’s a dynamic, behavioural assessment of financial resilience that demands a clearer, more current and forward-looking view of a consumer’s financial position to enable fair, sustainable decisions.
In this blog we’ll explore how lenders can improve consumer outcomes, pursue business growth and better adhere to regulations without taking on more risk.
Why traditional affordability checks may no longer be enough
For many lenders, affordability assessments still rely on static data — capturing a snapshot of a customer’s financial position at a single moment in time.
This approach has limitations and can fail to account for:
Changing income patterns
Ongoing financial commitments across multiple products
Early indicators of financial stress
Increasingly, lenders are moving toward trended affordability insights, using up to 12 months of behavioural data to understand not just a customer’s position today but how it’s evolving — and its likely trajectory. The result is a growing gap between what lenders can see and what customers are experiencing. As affordability becomes more dynamic, lenders need insights that reflect:
Behaviour over time, based on key financial indicators
Patterns of borrowing and repayment
Changes in financial stability
Data from BNPL and other deferred payment credit products
A failure to address this crucial change could lead topoor consumer outcomes, limited business growth and issues with regulatory compliance.
How BNPL and short-term credit are reshaping affordability
BNPL has rapidly become a mainstream option inconsumer spending, used across both discretionary and everyday purchases. As usage has scaled, its impact on affordability has become more significant.
BNPL introduces:
Additional repayment commitments, often across multiple providers
Changes to available disposable income
Behavioural patterns that may indicate financial pressure or resilience
Crucially, not all lenders have access to this data when making affordability assessments. This lack of visibility can lead some to unintentionally take on more risk than they’re prepared for or, in more serious cases, to lend more than a consumer can reasonably repay.
As BNPL becomes a regulated product and consumer adoption continues to climb, understanding these payment methods and how they’re used is essential to ensuring lending remains both responsible and sustainable by accurately reflecting total financial commitments, disposable income and true repayment capacity — thereby protecting both business and consumer outcomes.
TransUnion® was the first UK credit reference agency to integrate BNPL data into consumer credit files, giving lenders greater visibility into consumers’ financial commitments and supporting more responsible lending. By incorporating over 130 specific BNPL data attributes, our solutions help you make more informed and confident lending decisions.
What lenders need to do next to enhance affordability assessments
To respond effectively to these changes, lenders must modernise how affordability is assessed. Let’s examine what this could look like in real terms.
1. Build a robust view of financial commitments: Adopting affordability assessments that include all relevant obligations is an essential first step for those looking to make more robust lending decisions. As well as existing borrowing commitments from traditional lines of credit, lenders should look at short-term credit use like BNPL to make more holistic and accurate decisions.
2. Look beyond static data: Where traditionally, lending decisions were made from a single “snapshot in time,” those who leverage trended credit data can better understand how income, spending, repayment commitments and debt evolve — using metrics, such as expenditure, payment and debt-to-income ratios, including priority and non-priority spend over a 12-month period. While an applicant may look low risk at a single point in time, trended data could reveal they regularly max out credit cards or that their balances are rising month by month. This enables a more predictive and forward-looking view of affordability, allowing lenders to anticipate future affordability trajectories rather than merely asses current risk,. This helpsavoid misleading snapshot bias and empowers lenders to make more sustainable lending decisions.
3. Reflect real-world income dynamics: The way workers in the UK earn money has changed. Where once many of us worked for a regular income each month, an increasingly large portion of the UK workforce is now earning the majority — if not all — of their incomes from non-traditional sources. In fact, 13.3% of the population operates as self-employed,2 5% work on a freelance basis and a further 13.7% engage in the gig economy.3 Unfortunately, because of their variable incomes, many of these individuals are frequently blocked from accessing credit under traditional credit assessments as they’re deemed too high risk. This pattern is also perpetuated across individuals with multiple income sources and those who have suffered a recent income shock. As a result, lenders could be missing out on thousands of viable customers because they don’t (or their data doesn’t) account for real-world income dynamics. Gaining a clearer view of a person’s income over time allows lenders to accept more potential customers who fall within their risk appetites —improving consumer outcomes and promoting business growth. By incorporating income verification, modelled income and income trend analysis, lenders can build a more accurate and resilient view of financial capacity, even where traditional data is incomplete.
4. Strengthen transparency and governance: As regulation continues to evolve, lenders must ensure their decisioning is explainable, consistent and aligned with regulatory expectations. This means it’s now essential for lenders to deliver fair outcomes, anticipate risk, proactively identify vulnerability and show decisions lead to good customer outcomes. Those that invest in getting this right will be better positioned to:
- Respond quickly to regulatory scrutiny
- Adapt to future rule changes
- Demonstrate fairness and accountability
- Support sustainable, responsible growth
Ultimately, strengthening transparency and governance isn’t just about compliance —it’s about building trust, reducing regulatory risk and enabling more confident, defensible decisioning at scale, with transparent, explainable decisioning supported by clear audit trails, a critical requirement under FCA Consumer Duty.
5. Invest in data integration and visibility: Investing in robust data — including those offered as part of TransUnion’s affordability solutions —improves visibility of a borrower’s overall financial position and enables a holistic, decision-ready view of each customer across the lifecycle. This is critical in a landscape where financial commitments are increasingly fragmented4 across products and providers.
How better affordability insight can drive business growth
While affordability is often viewed through a regulatory lens, it’s increasingly becoming a driver of competitive advantage and sustainable growth.
Richer, more accurate affordability insights help lenders:
Approve more creditworthy customers with confidence
Reduce false declines, improving customer experience
Increase conversion rates through better decisioning
Balance risk and growth more effectively
When lenders understand affordability more clearly, they can move beyond risk avoidance to smarter, more inclusive lending decisions that help them gain a distinct advantage over competitors.
From affordability assessments to affordability strategies
Affordability is no longer just a checkpoint in the decisioning process — it’s a strategic capability that underpins smarter decisioning, stronger portfolios and better customer outcomes. To lead the charge, lenders must move away from static, compliance-led checks and instead transition toward dynamic, insights-driven affordability strategies. Those that adopt this early will enable:
Earlier identification of risk
More proactive customer support
Improved portfolio performance
How TransUnion supports smarter affordability decisioning
TransUnion’s affordability solutions combine:
Comprehensive bureau and SHARE data
Visibility of BNPL and short-term credit commitments
Income insights and verification capabilities
12-month trended affordability analytics and predictive indicators
Affordability and indebtedness risk signals (including debt-to-income ratios)
This enables lenders to:
Understand the real impact of borrowing on disposable income
Predict future affordability trajectories, not just current positions
Detect early signs of income shock or financial stress
Deliver transparent, explainable and regulator-ready decisions
Improve consumer outcomes
Approve more applicants
Support sustainable growth
TransUnion turns complexity into clarity — helping lenders make smarter, fairer and more confident affordability decisions.
Preparing for what’s next
The affordability landscape is constantly evolving as consumer behaviour changes, new credit products emerge and regulatory expectations increase. Lenders that act now — by strengthening data, improving visibility and modernising decisioning will be best positioned to improve consumer outcomes, comply with regulation and gain an advantage over competitors.
Ultimately, success will come down to one thing: seeing the full picture of affordability — and acting on it with confidence.
For more information on how TransUnion’s affordability solutions can support your affordability assessments, contact a member of our expert team on 0330 024 7574 or via our website.
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