2007 SEES MORE CONSUMERS DECLINED CREDIT
Equifax warns that impact of credit crunch is set to continue in 2008
London 4th January 2008 – The effect of the credit crunch and lenders tightening checks during 2007 has had a definite impact on consumers applying for typical loans, according to a recent survey by Equifax, the leading instant online credit information provider. The survey* amongst Equifax customers found that the number of people refused credit in 2007 increased from 54% to 63% compared to respondents to the same survey in 2006. These findings come as a Bank of England survey** of credit conditions showed that lenders had unexpectedly made big cuts in secured lending to households in the fourth quarter of 2007. Banks also cut back on credit for unsecured household borrowing, putting pressure on flagging consumer spending.
“What our survey supports is industry expectations that lending criteria would be tightened following the credit crunch mid 2007” confirmed Neil Munroe, External Affairs Director, Equifax. “Clearly this presents a challenge for consumers looking to get new credit in the early part of 2008. It also highlights the need for a greater understanding of the factors that influence an individual’s ability to get new credit. 40% of those applying for credit did not check their credit rating before making the new application. And 49% of those refused credit said they did not know the reason why.
“But in the case of those who said they did know the reason why they were declined, 52% admitted this was because of missed payments on other credit agreements. This was much higher than in our 2006 survey where only 28% said they had missed past payments on other loans or credit cards. This suggests that rising interest rates during the last year or so started to have a real impact on consumers’ financial management. “
The Equifax survey also looked at consumers’ ability to get the rate advertised or promoted by lenders. Here the trend seems to be more positive in 2007 with 61% of consumers who said they had applied to a specific offer not getting the rate advertised, compared to 69% in the 2006 survey.
The Equifax survey also revealed an increase in the number of consumers seeking a copy of their credit file before applying for a loan. 53% didn’t check their file in 2006, compared to 40% in 2007 - a positive step in the right direction.
“While some of the findings of our survey are shocking, it is not a complete surprise”, confirmed Neil Munroe. “With a number of interest rate rises during 2007 many consumers have been feeling the pinch and have perhaps fallen behind with payments. But with tightening lending criteria in the aftermath of the credit crunch, lenders will be looking more closely at applicants’ credit histories. And late payments could be enough reason to refuse a loan.”
Consumers should get an up to date copy of their credit file to check it accurately reflects their personal financial circumstances. By obtaining a copy of their Equifax Credit Rating, which includes their Equifax Credit Report, they can also see what sort of credit score they have and how likely they are to be able to get new credit.
The Equifax Credit Rating™ can be bought instantly online from www.equifax.co.uk for £13.95.
ENDS
*Survey of 647 Equifax customers August 2007
** Bank of England survey was concluded on 12 December 2007
For further press information please contact: Eli Puzey, Louise Fowler or Wendy Harrison at HSL on 020 8977 9132 / Fax: 020 8977 5200 or Email: elinor@harrisonsadler.com
About Equifax
Equifax empowers businesses and consumers with information they can trust. A global leader in information solutions, we leverage one of the largest sources of consumer and commercial data, along with advanced analytics and proprietary technology, to create customized insights that enrich both the performance of businesses and the lives of consumers.
Customers have trusted Equifax for over 100 years to deliver innovative solutions with the highest integrity and reliability. Businesses – large and small – rely on us for consumer and business credit intelligence, portfolio management, fraud detection, decisioning technology, marketing tools, and much more. We empower individual consumers to manage their personal credit information, protect their identity, and maximize their financial well-being.
Headquartered in Atlanta, Georgia, Equifax Inc. employs approximately 6,900 people in 14 countries through North America, Latin America and Europe. Equifax is a member of Standard & Poor’s (S&P) 500® Index. Our common stock is traded on the New York Stock Exchange under the symbol EFX.
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