Credit rejections ‘will lead Brits to higher-rate loans’

Credit applications are being rejected with increasing frequency and this could see more British consumers turn to higher-rate loan deals, according to one economic expert.

Neil Munroe, external affairs director for Equifax, is convinced that lending criteria will continue to be tightened this year and as a result many people will enter the sub-prime sector in order to solve their debt management problems.

In many cases, the consumers being rejected for loans or credit card debt deals may really feel that they need to borrow more and this will lead them straight to higher rates of interest, Mr Munroe suggested.

“There is this issue of the rejection of people forcing them into having to pay more, but that’s probably been happening for the last few months around the margins,” he said.

UK consumers currently owe in excess of £1,420 billion to lenders from around the country, according to figures from Credit Action.