Parents Shoulder Bills For 40-Year-Old Kids

Adults in their 30s and 40s are increasingly becoming 'credit virgins' as their parents continue to pay their bills and take out loans on their behalf, according to new research.

A quarter of UK parents are taking out credit agreements on behalf of their grown-up children, putting mobile phones contracts, car loans and mortgages in their own names.

Some 40% of those in their 20s, 18% of those in their 30s and 22% of those in their 40s admit they have never taken out any form of credit.

This has resulted in an estimated seven million 'credit virgins' - adults who have signed over their financial lives to mum and dad and have no formal money agreements of their own.

Credit report service Noddle, which conducted the research, warned that 'overprotective' parents were placing their grown-up children at a long-term financial disadvantage.

Not having a credit history made it more difficult to secure loans, mortgages, credit cards or a mobile phone contract in the future, even if someone can easily afford to, Noodle said.

The study suggests the rise in stay-at-home university students , high youth unemployment and prohibitive housing prices are exacerbating the problem.

Consequently, one in three of those in their 20s, one in ten 30-year-olds and close to one in ten 40-somethings still live at home with their parents, relying on them for financial support.

In total, 63% of parents provide financial support to their adult children, handing over an average of £3,632 in the last 12 months.

One in ten parents said they make monthly payments of £240 to their grown-up kids to cover day-to-day living costs such as utility bills, rent and going out expenses.

A fifth of these parents said they give a helping hand because their children are unemployed, and 8% because they believe their children are not financially self-sufficient.

A further 6% said their children feel they are entitled to immediately live a middle-class lifestyle because that is what they are used to.

Tom Ilube, founder of Noddle, said: "Companies look at your credit report to help make decisions about whether to lend you money based on the information it contains, so it's important to build up a credit history to improve your rating."