January 24, 2006

A recent survey by Uswitch has revealed the alarming fact that lenders are not doing enough to verify proof of earnings when someone applies for credit.

The price comparison website, Uswitch, commissioned a survey that questioned nearly 2000 consumers, of whom 749 had successfully applied for a credit card in the last year.

It was found that in many cases no questions were asked as to the consumer’s income claims. In one case a consumer who earned £10000 was given a credit limit of £12000.

Many debt advice groups called the findings “alarming”

It is recognised that banks and lenders have to ensure that the information given to them is indeed accurate. This lack of action could have a catastrophic reaction to people on a low wage.

There are now major concerns that banks are making it too easy for already indebted consumers to obtain more credit.

A spokes-person from the Association for Payment Clearing Services, Sandra Quinn said, "There are a number of steps which the industry takes to lend responsibly. One is examining an applicant's credit record, which provides more information about how they use credit than just their salary. We also rely on applicants providing us with accurate information on their credit application. It is not in any bank's interest to lend to people who cannot afford to repay."