Adults living on a financial knife edge

Nia Williams

March 12, 2010

Independent research commissioned by Callcredit Information Group has revealed that this age group, typically adults with a young family to support, appear to be a hard hit group by the continuing recession, with one in four (25%) saying that a drop of just £300 in monthly income would cause them to default on their mortgage payment.

Commissioned by Callcredit, the YouGov research also shows that more than one in eight (13%) adults in this age bracket has deliberately over-inflated their income when applying for credit in order to help them secure a higher credit limit, compared to less than one in ten (9%) of the overall population. Ten per cent of those aged 35 – 44 have also taken out credit in the past, knowing that they might not be able to meet the repayments.

The research also showed a noticeable reduction in the proportion of people paying off their credit card bills in full each month with one in twenty (5%) people who previously paid their bills in full now paying just the minimum or a fixed amount. This rises to one in fourteen (7%) people aged 35 – 44 years.

“These statistics are extremely alarming,” said Graham Lund, managing director, Callcredit Information Group. “A significant proportion of people aged 35 – 44, many of who may have families to support, are living on a financial precipice, where just one negative event, such as a reduction in paid overtime or an unexpected expense could have disastrous financial consequences.

“What is of real concern is that some people are deliberately over-inflating their income when applying for credit in order to increase their credit limit. Credit limits, which are determined by individual lenders, are assessed on how much an applicant can realistically afford. If the borrower is inflating their income significantly and then maxes out their high credit limit, they are running a serious risk of getting into financial difficulties and being unable to repay the debt.”

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