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The Credit Given to Consumers Without Making Any Income Checks
According to a research, Nearly five million people have been sanctioned credit cards in the past year without having to prove their income.
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June 23, 2008 (FPRC) -- LONDON – Saturday, June 23, 2008 – (Ask4loan) – According to a YouGov poll of 4,048 people, somewhat 84 percent of successful credit card applicants, that is around 4.8 million people, were not asked to provide any proof of income, such as payslips, to support the figures stated in their applications in the past 12 months. This is quite regretting.
The survey also showed that 14 percent were not asked about their salary or outgoings during the application process. It simply means that all those 14 percent people obtained an average credit of 3,545 pounds, which equal to a total of 2.9 billion pounds. This survey was commissioned by a famous price comparing website uSwitch.com. The survey also exhibited that only 8 percent of the surveyed people were asked for proof of income or outgoings at the time of application process.
Some 5 percent of people admitted to lying about their salary when applying for a credit card. Whereas, other 70 percent got the credit onto their actual income and as a result, they have secured over 693 million pounds worth of credit.
The head of personal finance at uSwitch.com, Mr Simeon Linstead said, "We cannot ignore the fact that the credit crunch has forced the credit providers to tighten their belts and reject applications that may lead to further write-offs"
"(However) the fact remains that just because a consumer appears to have an 'appropriate' credit score, it doesn't mean they are always honest about their income and actually have the cash available each month to pay their credit card bills,” added Mr Linstead
He stated, "The credit squeeze will back some consumers into a corner and people will resort to lying about their salaries as this is such an easy loophole to apply."
He also said it was too early to tell whether the newest version of the Banking Code, which came into effect in March 2008 and made credit reference checks compulsory, was having the desired effect or not.
The new code of conduct makes it necessary for the credit card companies to also take at least one of three other measures. Those measures are (1) obtain details of income and financial commitments; (2) evidence of how finances have been handled in the past; (3) use credit assessment techniques, such as credit scoring or internal credit scoring processes.
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