Lenders needs to be more careful on checking applicant information
A recent report has shown that a worrying number of lenders are failing to carry out important checks into the income of applicants that apply for unsecured finance, and there are concerns that this could lead to many people getting into unmanageable debt levels and could result in an increase in bad debt levels in the UK.
One industry official recently stated: ‘We see far too much evidence of people having been lent money where it was clear from the start that they would not be in a position to repay it. We have repeatedly called on lenders to carry out thorough checks and it is imperative that this is done.’
Another official added: ‘With more than 7,716 loan repayments being missed every day and record write-offs, you might think that lenders had learnt their lesson.’
The recent research showed that many applicants were not being asked for proof of income when applying for unsecured credit with some lenders, despite the evidence that many other lenders have really tightened up on their lending criteria as a result of the global credit crunch. More worryingly, it was found that some applicants were not even being asked about their income on the application.
Figures show that only 30% of borrowers applying for unsecured credit in the last twelve months were asked to prove their income before being given the loan or finance that they were after. Experts are concerned that this practice will lead to increased defaults, and have urged lenders to be more stringent with regards to carrying out the necessary checks to verify the income of each applicant before agreeing to offer finance.
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