What would you do or change?

[gizmo]

I agree with all the above - I had a different experience with Picture when we tried to get a neg equity loan with them at the worst time when we had "hit the wall" and had no other way to continue to rob peter to pay paul. they picked up on the mess we were in and said no, quite rightly. With hindsight now it still amazes me that creditors continued to lend me the money they did even thought they must have seen I had maxed out on every limit available. A good income should not have even allowed this - I could have played snap with the amount of credit cards I had - I think we owed practically everyone we could owe money to. I didn't need a credit card wallet but a seperate handbag for them all. It is simply far too easy to get credit these days and that really needs cracking down on to stop the debt spiral. its ok for people to say consumers should be responsible but once you are in a "snowball" situation you are desperately trying to keep afloat all the time and if another card buys you more time you do that even though you know its not helping matters. debt is an incredibly difficult situation to face up to and if you can continue to borrow and put off the dreadful day of reckoning you will tend to do that until you have nowhere else to go.

[freelili]

My bank phoned me to offer a new loan, to consolidate the other and the credit card, they had already done this twice so the loans were increasing in size each time. I had always paid on time and had never missed a payment. I said no to the new loan twice but still they continued to phone, they said that the interest was the best they could offer and compared to the credit card, I was silly not to accpet, I did and guess what? I still had the credit card. I would change the way banks call people and 'sell' loans, they have a clever way with words, like they are financial experts and know best.

LILY

I asked God for a solution and have to live with his reply.

[Storm]

Typical bad debt rates for prime lenders are 2% (bad debt is defined as 3 down or more) subprime lenders its more like 6% but the rate reflects that.

This means that for every 100 decisions to lend 98 people repay within the agreed terms and 2 don't.

Automated underwriting / scorecards primarily use a system of odds - ie what are the odds of that application based on probably 15 - 20 attributes to repay a loan.

The system uses historical performance of there existing customer base to find clusters of customers with the same characteristics who successfully completed an agreement and more importantly gave the expected return ie earned them the level of profit they expected.

A number of indebtness initiatives are being implemented throughout the credit industry - one with possibly the largest impact is that the main banks (excluding Barclays) have all signed up to a new service with CallCredit that allows them to share indebtedness information. Unfortuanately this is a closed group and the information is not available to other credit providers.

Credit providers find the whole issue of indebtedness very difficult to analyse and a significant number of lenders do not supply data to the CRA's. The CRA's don't hold any data from external sources such as council tax, utilities etc.

A handfull of analysis projects have been completed over the past couple of years - all of which summarise that using indebtedness with the underwriting process had little or no effect on the expected bad debt rate for a particular loan book.

Presure from the consumer market is for instant access to credit when and if we want it. Consumers want the process to be quick and hastle free so lenders respond because with that process 98 out 100 people will repay there credit.

What is needed are changes to the way we manage consumer data - a central repositry would work or a sharing of data with all three of the primary CRA's and changes to the law relating to the issue of Consumer Credit Licenses that requires ALL lenders and credit providers including councils, utility providers, insurance providers etc to provide payment data.

In reality this will never happen - Experian have invested hundreds of millions as have Equifax and Callcredit each tries to gain competitive advantage from the other in that it tries to prevent credit providers working with other CRA's. Experian which was recently seperated from its parent GUS and floated has a market value of £6075 million, over 90% of its revenue comes from credit reference data.

Initial reponse from the credit industry is that IVA's whilst increasing at a signicant rate (In quarter 2 2006 - 154% year on year growth this growth reduced to 82% in quarter 4) analysis shows the overall bad debt figure is increasing marginally in line with expected market conditions.

[jane.l]

well, Picture are the stuff of my nightmares! I suppose it is all our own fault for getting a loan off them, but we already had a 120% mortgage, neg equity and yet they STLL lent us £35,000! I just hate even thinking about the amount we owe, I am still getting letters offering me loans, even though we are in this mess financially! I think it is definitely too easy to borrow money, I worry about my children and just hope they learn from my mistakes!

[Welsh Boy]

janel

The very scenario you are mentioning is the reason that I originally posted this article. It`s very ineresting to read other opinion`s on what they would like to see happen.-Tony