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Many thousands of UK loan and credit borrowers have painted an inaccurate portrait of their financial affairs.

A recent study has revealed that almost 20% of the population are frequently turning to loans and plastic as a means to fund a certain proportion of their lifestyle, whereas a further 5% admit to using loans on an almost continual basis to finance their over indulgences.

The report highlights that of the 25% of people identified as being dependant on credit to grease the cogs of their day-to-day lives, interestingly, 100 percent of the group had self-certified themselves as being “middle band” with regards to annual household income.

What this suggests is that either people are way far off the mark with regards to the amount that they actually earn and what is left to spend after fixed costs have been deducted, or, approximately quarter of the country are living vastly beyond their means.

One expert suggested that based on the accumulative total of debt that Brits had managed to rack up over the last decade or so, the most likely answer is that a significant number of British residents are living a lifestyle that their bank balance cannot support. This is especially worrying when you take the current volatility of the credit and housing markets into consideration.

Individuals who are struggling to manage the repayment of a personal loan or any other kind of credit commitment are being offered additional help from the CAB.

The organisation has drafted a series of pamphlets designed specifically to help those people whose situation can be bettered through practical advice opposed to the use of professionally orchestrated debt products.

A representative from the CAB explained that the documents contain a wealth of expertly penned information, which centre on a variety of different topics and subjects believed to be core to a number of debt related mishaps. The organisation believes that a high percentage of people who call into their branches, seeking help with the management of a particular credit product will find the answer that they are looking for within the pamphlets.  

The CAB hopes that the literature will help to resolve simple debt problems at an early stage, thus reducing the likelihood of serious financial difficulties born as a result of allowing debts to fester for a prolonged period of time.

A historically high number of first time buyers are collapsing under the weight of their home loan repayments and future prospects, new information reveals.

According to one source, typical repayment figures for new homeowners within the UK have increased by more than double the rate in which gross annual earnings have increased. It is thought that more than 50% of FTB’s are now classing their financial situation as critical.

To rub salt further into the wounds, home loan repayments are continuing to rise despite BOE attempts to control rates through further reductions in base interest. In addition, analysts fear that a prospective fall in house prices will further worsen an already desperate situation, as indebted homeowners fall into negative equity.

One expert commented that both British homebuyers and homeowners were in for a bumpy ride over the next few months. The majority of new homebuyers have all but admitted defeat in their attempts to find a property that falls within their budget, whilst at the same time securing a competitively priced mortgage. On the other hand, individuals who were able to secure a property pre credit crunch are now fearful of their position amidst rising mortgage rates and uncertain market conditions.

The national credit squeeze will affect all areas of the personal finance markets, and is anything but exclusive to the loan and mortgage arenas.

According to one financial expert, any company which offers credit to its customers either through its own facilities or a third party will be looking to curtail its level of defaults and potential risk over the coming months. This could essentially limit access to and cover a wide and varying range of possible outlets including the likes of furniture chains and electronic retailers as well as the more obvious loan and mortgage providers.

The most likely type of customers to be affected will be those people who have had a degree of bad credit registered against them in the past such as the odd missed payment, however, individuals with a clean credit profile are likely to remain unaffected or at least for the time being.

The credit crunch and the effects there of are slowly creeping into the lives of many British Citizens, and even those people who consider themselves to be exempt and unaffected by the dreaded squeeze, may soon find it rears its ugly head where they least expected it.

Recent reports indicate that Britain is currently sitting on more than £24 billion pounds worth of unpaid, unsecured credit.

The news comes in light of a study conducted by a reputable credit management firm, who reveal that some 1 million people are refusing or are unable to repay loan and credit card debt, due to severe restrictions on their personal finances.

In response to the figures and as a result of the continuing difficulties which are affecting the UK’s economy, the firm predicts that their will be a sharp and even unprecedented rise in the number of people made bankrupt or forced to pursue other avenues of alternate debt help over the next 12 months.

In addition, the firm also believes that a rise in home loan repayments, coupled with decreasing levels of disposable income are also likely to further boost unsecured default numbers, whilst fuelling a rise in the number of home repossessions this year.