UK consumers have £4.7bn of hidden debt hanging over their heads as official statistics overlook a massive black hole of arrears.

Thinktank Demos, which was commissioned by the Barrow Cadbury Trust, analysed unpaid rent and council tax as well as utility bills to reveal each British household faces about £200 worth of hidden debt.

Demos has created a "harm index" in response to its shocking findings, which enables it to rank different types of debt according to their harm levels.

"Deciding which forms of debt are 'bad' and need stronger regulation should not be based on industry definitions," said Jo Salter, a researcher at Demos.

"It should be judged by looking at what types of debt cause people the most stress, disrupt their relationships with those around them, and undermine their capacity to help themselves – because this is the reality of debt problems."

The index, which was compiled by asking 2,000 people to rate the negative impact of each of their debts, assigns an overall score of 100 to a debt.

The survey revealed that illegal loans topped the poll of the worse harm with a score of 91.

Payday loans were second on the list with 68, council tax arrears scored 62, rent arrears at 61, utility bills at 57 and unpaid fines at 54.

Sara Llewellin, chief executive of the Barrow Cadbury Trust, added: "The Barrow Cadbury Trust welcomes this timely report on debt from Demos, in particular the focus on the individual and recommendation that debt statistics should include unpaid rent, council tax arrears and overdue utility bills.

"Also of concern to the Trust is the impact of debt on an individual's emotional resilience and quality of life as well as the communities in which they live."

Beyond the harm index, Demos has also called on lenders to implement a traffic light rating system on all debt products and adverts – similar to food packaging – clearly illustrating the potential harm of a loan.