Potential borrowers could face a struggle
February 5, 2008
Experts have warned that consumers could be facing real problems when it comes to borrowing money and taking out credit in the months to come, and this comes as a result of the recent credit crunch that has impacted upon the financial markets in the UK and globally. Increased stringency from lenders in the light of the turmoil in the financial markets has resulted in many people finding it increasingly difficult to get finance or credit, particularly in cases where their credit is not very good.
The increased stringency from lenders means that consumers that are looking for all types of finance, such as loans, mortgages, credit cards, and other types of credit, could experience difficulties and delays, as lenders try to protect themselves against potential losses. Many consumers have already faced difficulties when it comes to switching credit cards, with lenders now carrying out more stringent checks and being more reluctant when it comes to giving out credit.
An Equifax spokesman stated: ‘Lenders are looking far deeper into people’s credit histories. They will be looking for early warning signs of how borrowers deal with credit. Lenders are more interested in how borrowers service their debt than simply whether they have kept up with payments in the past.’
He also said: ‘There has been a number of reports from credit card organisations stating that bad debts are rising and bank’s are increasing their provisions to tackle this. Credit cards, those who are moving their balances onto 0% deals, are also finding they are getting turned down more and often it is the case that there is nothing wrong with their credit history but the lenders are just saying no.’
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