Increased credit checks 'possible' as FSA counters bad debt

The Financial Services Authority FSA is proposing that mortgage lenders will have to carry out more comprehensive credit checks on potential borrowers.

Increased credit checks will need to be carried out on all applicants in a bid to prevent consumers taking on irresponsible levels of debt.

Katie Tucker, technical manager at mortgageforce, said she was unsure whether the new measures were needed, given that lenders' credit scoring is already "painfully stringent" for first-time buyers.

She added: "Credit checks are already pretty thorough and only paint part of the picture of how likely a borrower is to make their monthly payments.

"Arguably, the FSA should reduce the costly regulation they impose on lenders, so the lenders can afford to employ and train more specialist underwriters responsible for analysing borrower risk on an individual basis."

Offering free debt advice last week, Beccy Boden Wilks, spokesperson for the Money Advice Trust, claimed that mortgage repayments must always be prioritised by consumers struggling to pay the bills.

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2009-10-20 10:17:19 © Moneyextra.com