Debt Management in the News
Proof of income not asked for millions of credit card borrowers
14 June 2008
It was claimed today, that millions of borrowers have been given credit over the past year without needing to provide proof of affordability.
Research by uSwitch has revealed that 84% of successful credit card applicants were not asked for proof of income, with 14% not even being asked their salary.
A small percentage admitted in the poll to lying about their income to obtain credit, leaving themselves potentially in a situation where they could not afford to repay their debt.
Simeon Linstead, head of personal finance at uSwitch, said: "We cannot ignore the fact that consumers have a responsibility to borrow sensibly, but lenders need to help the process and tighten their credit checking procedures."
Lenders now have to check creditworthiness of their customers with credit reference agencies such as Experian, and ask customers for either details on income and financial commitments, financial track record, or use credit assessment techniques such as credit scoring or internal credit scores.
The average limit given on a new credit card was £3545, or 20% of the national average net salary of £18,083.
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