Credit Rating Fears Helping Doorstep Lenders

Mon, 23 Jun 2008

New research has shown that an increasing number of Britons are turning to doorstep loans as a result of fears about their credit status. The research, conducted by Equifax, showed that 31 per cent of those worried about their credit status had turned to a doorstep loan, either because they do not meet the increasingly rigorous standards set by high street lenders, or because they fear they will fall behind on payments and harm their credit status. However, some doorstep loans have been found to have interest rates as high as 2.6 million per cent APR – 520,000 times higher than the Bank of England base rate .

The poll also revealed that 32 per cent of respondents were considering stopping credit card debt repayments to ensure they could pay their mortgage . Equifax attributed this trend to the failure of banks to pass on the cut in interest rates to their customers. Other cutbacks can be seen in people’s expenditure, with 24 per cent of participants revealing they have decreased their life insurance payments, whilst 29 per cent have reduced their pension contributions.

The research also unveiled a gender difference, with 26 per cent of women claiming to have felt a direct impact from the credit crunch, compared to just 9 per cent of men.
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