You are here: Home - Credit Cards & Loans -

Billions in loans issued without proof of income

Written by:

Research by comparison site reveals that £20.9bn has been issued in unsecured loans over the last 12 months without proof of income.

Despite the credit crunch currently gripping the nation and banks writing off £17bn of bad debt in 2007, over £4bn more than in 2006, lenders continue to fuel the fire by not making sufficient credit checks during the unsecured loan application process.

This week’s changes to the banking code, which impact unsecured loan and other credit applications, stipulate that it is now compulsory to carry out a credit reference agency check alongside at least one of the following three checks; income and financial commitments, historical financial behaviour or credit scoring. Unfortunately, the effectiveness of these checks are dependent on which are carried out.

The comparison site also found that 70% of loan applicants were not asked for proof of income and 45% of people did not get a loan from their own bank, meaning the company did not have much information about the applicant’s credit worthiness.

Mike Naylor, personal finance expert at, said: “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.

“While the credit crunch has forced lenders to tighten up their lending criteria, these latest amendments to the banking code do not go far enough to help promote responsible lending in all cases.” 

Related Posts


Tag Box

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

ISAs: your back-to-basics guide for 2018/19

Here’s everything you need to know to make the most of your unused ISA allowance ahead of the 5 April deadli...

A guide to Sharia savings accounts

A number of Sharia savings products have upped their game in recent months, beating more familiar competitors ...

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
New ISA rules to be introduced

The revised system for Individual Savings Accounts starts on 6 April 2008, making the tax-efficient vehicles simpler and more flexible.