"Previously creditworthy people" being turned down for loans

21 August 2008

Tighter controls over lending are stopping more people being accepted for mortgages and loans, a new report has shown.

GE Money has said the crunch has seen people who would previously have had few problems securing a loan now classed as a credit risk.

Citing research undertaken by TNS, up to 450,000 people have applied for loans and mortgages four times or more before being accepted.

Overall, over 3.4 million customers were rejected for remortgages, first mortgages, unsecured and secured loans in 2007 and the first half of 2008.

It could be suggested that borrowers are being forced into deals with higher rates of interest – or even into rented accommodation instead of their own homes – which may cause debt problems.

Head of mortgage marketing at GE Money Gerry Bell said "reputable" professionals should be used when arranging loans.

"The key to successfully navigating through the current storm is to ensure you do your homework, check your credit file looks as good as it can and potentially seek expert advice from a broker," he commented.

A consolidation loan may be an option for those hoping to clear their debts at a rate they can afford.

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