More and more UK banking institutions are rejecting loan applications from customers who have a tainted or sub prime credit history…but why?
Analysts believe that in light of the recent fiasco, which affected what was once one of the UK’s largest sub prime loan providers (Kensington) and also the fall of one of the US’s largest bad credit loan providers (New Century), many banks have unsurprisingly, become reluctant to serve bad credit customers.
One of the first major banks to actively start refusing what it deemed to be “risky” loan applicants (Barclays) has stated that sub prime lending is starting to have a major effect on bottom line profits.
Experts suggest that the sub prime market has become far too volatile for many mainstream banks to continue operating in, with members of the media describing the actions as an attempt to bottleneck the availability of credit to certain consumers.
A spokesperson for the bank has stated that a thorough review of its customers, and their credit situation is currently underway, which will undoubtedly result in a reduction of credit availability for those people who have a history of being continuously over-stretched.
