Analyst Datamonitor has found that the number of UK consumers being denied credit by mainstream lenders is forecast to rise from 7 million in 2006 to 8.6 million by 2011.
This has been attributed to a rise in the non-standard credit population in 2006, which points to consumers beginning to struggle in an economic climate which is tougher than in previous years. In 2007 we have seen a number of mainstream lenders tighten their criteria, as they have seen their bad debts increase year on year.
With the recent rises in interest rates and high levels of customer indebtedness, with 2.1 million UK adults struggling with repayments, according to research conducted by YouGov, the non-standard population is set to increase. Datamonitor believe that the increase in the non-standard credit population will be driven by higher unemployment, an increase in CCJs, arrears and repossessions and self-employment.
This presents an opportunity for non-standard specialist lenders to develop products which the non-standard population have access to, whilst ensuring they adhere to the principals of responsible lending.