Applications for credit reports rise as customers are refused loans

Twice as many customers are applying for credit reports as six months ago in an effort to understand why they are being refused credit on loans, credit cards and mortgages, according to Experian, the UK’s biggest credit scoring company.

Consumers are becoming increasingly “proactive” in their approach to their finances as they try to maintain a good credit history.

James Taylor from Experian told Fairinvestment.co.uk that “up to 20 per cent of people now check their credit report before applying for credit”, with the majority making use of the internet to do so.

UK consumers’ personal debt now stands at £1.4 trillion, yet many people are ignoring the credit crisis and continuing to acquire more debt as they spend more than they can afford, according to research by CreditExpert.co.uk.

With lenders restricting their criteria, consumers are advised to regularly check their credit reports to help them stay on top of their finances.

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Credit crisis may force people to use more expensive lenders

The global credit crunch and more restrictive borrowing terms that many lenders have implemented may force consumers to go to higher-cost lenders, an expert from Equifax has said.

According to Credit Action, personal debt in the UK stood at £1,421 billion at the end of February 2008.

Total lending in February was up by £9.8 billion on the previous month, of which secured lending accounted for £7.4 billion and consumer credit was £2.4 billion.

Neil Munroe, external affairs director for Equifax, said that if banks reject more loan applications people “may be forced into more high-cost borrowing, so forced down into the subprime or near-prime market, whereas before they might not have considered going there”.

However, he also pointed out that banks have an “appetite” to lend people money, they will simply be more cautious when deciding whether to lend to people who they believe may not be in a position to repay the loan.

Tags: uk, loan applications people, External Commercial Borrowing, consumer credit, credit crisis, Neil Munroe, secured lending, equifax