UK lenders tighten borrowing criteria

LONDON • Britain’s major banks are making it tougher for consumers to get unsecured credit and say that defaults on some such borrowing are rising.

In its Credit Conditions survey, the Bank of England (BoE) said the criteria for both credit-card borrowing and other unsecured loans tightened in the third quarter. Its measure of the availability of unsecured credit fell again and stayed below zero for a third quarter.

Lenders in the BoE survey — including Barclays plc, HSBC Holdings plc and Royal Bank of Scotland Group plc — said the tougher stance was due to the economic outlook, as well as a changing appetite for risk.

“Credit-scoring criteria for granting both credit card and other unsecured loans were reported to have tightened again,” the BoE said, “while the proportion of unsecured credit applications being approved fell significantly”.

It said default rates on credit-card lending increased “slightly”, while those on other unsecured lending rose “significantly”. With consumer credit growth rising at a rapid pace — though it’s slowed slightly in recent months — the BoE has identified it as a financial-stability risk. — Bloomberg

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