Risking it all: Consumer vulnerability and the credit rating panopticon

With access to consumer credit normalised in contemporary financial life, lenders use credit ratings to assess the risk of lending to potential borrowers and to determine appropriate rates of interest. Informed by the related themes of financial literacy, financial vulnerability, and financial resilience, this paper explores the dynamics of consumer engagement with opaque credit rating systems. To access affordable credit, consumers need to be disciplined in managing their finances so that they can build a good credit rating. However, the opaqueness of credit rating algorithms and the surveillant aspects of the credit system can lead to panopticism, with consumers required to navigate between controlling their credit ratings, while sometimes lacking the information to do so effectively. Using a Foucauldian lens, ideas from folk theory and drawing on data from 79 in-depth interviews, the implications of this panoptic tension and of governmentality for consumers’ financial wellbeing are revealed. A theoretical contribution is made to understanding how consumers develop the practical knowledge needed to manage their credit rating, leading to implications for policy and practice regarding the need for transparency in the credit rating system and credit decision-making.