Credit refusals up in 2007
Loans: Credit refusals up
Friday, 04, Jan 2008 12:22
The number of Brits refused credit last year rose as borrowing became harder.
A poll by credit record provider Equifax of its customers finds 63 per cent had been refused loan or credit card applications.
The annual poll records a 16 per cent increase in the number of people being refused credit.
The news follows Bank of England data yesterday showing banks and building societies are making borrowing harder for consumers with tougher lending criteria and levels of people opting for bad credit credit cards have risen.
"What our survey supports is industry expectations that lending criteria would be tightened following the credit crunch mid 2007," said Neil Munroe, external affairs director at Equifax.
"Clearly this presents a challenge for consumers looking to get new credit in the early part of 2008."
The poll also reveals 49 per cent of people being declined credit do not know why.
Mr Munroe explained last year's rising interest rates pushing many households' finances to the limits causing missed loan repayments were behind the rise in people refused loans.
"With a number of interest rate rises during 2007 many consumers have been feeling the pinch and have perhaps fallen behind with payments," he said.
"But with tightening lending criteria in the aftermath of the credit crunch, lenders will be looking more closely at applicants' credit histories. And late payments could be enough reason to refuse a loan."
Of those who said they did know the reason why they were declined, 52 per cent admitted this was because of missed payments on other credit agreements - a rise of 85 per cent.