Credit reference agency Equifax has said there is a trend among consumers to misrepresent their earnings when applying for a loan.
Of a sample database of credit applications, Equifax has found 40% of people overstated their income by at least £2,000, creating a problem for consumer finance lenders who must, under the auspices of responsible lending and the latest advice from the Office of Fair Trading, demonstrate full understanding of what a customer can afford before granting credit.
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More than a third of respondents, 35%, to an Equifax-commissioned YouGov survey of 2,074 adults in Februay 2013 said they believed it was acceptable to exaggerate take-home pay; 18% said it was acceptable if the individual was confident of repayment while 15% said it was acceptable if the individual soon expected an improvement in wage.
More than a quarter of respondents, 29%, felt it acceptable for an individual to overstate income by whatever amount they feel comfortable with when making a credit application.
richard.brown@timetric.com
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