A report from uSwitch.com has raised concerns that credit checks carried out in the UK are not sufficient to protect consumers from risky borrowing.
The price comparison firm has claimed that proof of income was not provided in almost 70 per cent of successful applications for an unsecured loan over the course of last year.
And this lack of thorough credit checking means that many people find themselves with a loan they are unable to pay back.
Furthermore, many consumers take on a loan with the aim of becoming
debt free but then choose not to repay their creditors with the money they have borrowed.
“With more than 7,716 loan repayments being missed every day and record write-offs, you might think that lenders would have learnt their lesson, but the potential profits have clearly been too good to resist,” said Mike Naylor, personal finance expert at uSwitch.com.
David Kuo, head of personal finance at Fool.co.uk, said recently that debt consolidation loans can offer a good way to solve financial problems for people with discipline.