Credit Card News Credit Card Firm Lending Checks 'inadequate' 15138967
Credit card firm lending checks ‘inadequate’
24 January 2006
Credit card companies also fail to look into how people will be able to pay back the potential debts that ensue, before offering them these cards with large credit limits.
An investigation by online comparison website uSwitch found that 88 per cent of credit cardholders were not obliged to prove how much they earned beyond writing a figure on their application form.
A further 95 per cent did not have to show that they would be able to repay the debt before they were sent their cards.
This lack of adequate checks meant that in a large number of cases, consumers were offered credit cards which had limits much higher than their salary.
“As consumer debts escalate, there need to be clear measures in place to ensure providers are lending in a truly responsible manner,” said Nick White, head of personal finance at uSwitch.
“The finding that only one in eight cardholders provided accurate salary or income details during the application process emphasises the significance of the lenders’ failure to conduct proper checks.”
Chief executive of national money education charity Credit Action, Keith Tondeur, called the results of the study “alarming” and said that more steps needed to be taken by lenders to resolve the situation.
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