Lenders To Limit Unsecured Borrowing To Better Quality Customers

Thu, 08 Apr 2010

Personal loan providers will only lend to "better quality" borrowers over the next three months, according to a new survey by the Bank of England.

The Bank‘s latest Credit Conditions report suggested that UK lenders will continue to tighten credit scoring for non-credit card unsecured borrowing this year, making it difficult for those with lower credit ratings to be approved for loans and overdrafts .

It said there was more appetite for risk among lenders relation to credit card provision as the economic climate improved, but added that demand for credit card borrowing fell in the first three months of the year.

The report also found that the number of people defaulting on unsecured loans fell by more than lenders anticipated.

In terms of business lending, the Bank said the availability of credit to firms increased in the first quarter, and that lenders expect the increasing approval of business loans to continue over the next three months.

The report said: "Lenders reported that the increase in credit availability had been supported by slight improvements in their funding costs and by an improved economic outlook for businesses."
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