Those who have been turned down for a loan need to take the time to consider why their application was unsuccessful, an industry expert has declared.

According to James Ketchell, spokesperson for the Consumer Credit Counselling Service (CCCS), people who have been rejected for forms of mainstream borrowing such as credit cards and personal loans should reassess their financial status. He stated that there is likely to have been a reason as to why they have been rejected for credit by a loan lender and that they should consider whether they would have actually been able to afford making regular repayments should they have been accepted. In addition, he reported that such consumers - and in particular those who would be the target of sub-prime lending - tend to be among the most financially-excluded parts of the population.

He said: “The first thing is if they are having difficulties, there is a reason that someone making an individual assessment of their situation has decided they might not be able to repay that money. So I think then people have to question whether they actually can afford to take the debt out in the first place and then really see whether that is really needed or whether it is merely wishful and something that people want rather than something that they need.”

The CCCS representative also stated that the condition of the country’s credit sector has “tightened a lot” during the past six months. Mr Ketchell reported that during this period of time loan lenders have become stricter in their provision of loans and other forms of borrowing. It was claimed that this was due in part to the rise in bad debt difficulties major high street financial providers have witnessed - which in turn has caused them to accept less applications from those wishing to take out a loan, especially from customers looking to borrow money for the first time. “In general the credit card industry especially has been a lot tighter than they were in the past but it is more to do with [bad debt] than with the sub-prime issues we have seen lately,” he added.

His comments come after research carried out by the Bank of England revealed the level of bad debt write-offs actioned by major British banks accounted for 2.1 billion pounds during the first three months of this year, in comparison to the 1.8 billion pounds noted during the same time in 2006. Meanwhile, it has been suggested that as a result of the recent ‘credit crunch’ in the United States’ sub-prime mortgage sector, those Britons looking to purchase a house are to face increased pressure on their finances as their ability to access a loan will be further squeezed.

Last month, research conducted by CreditExpert suggested that by consistently overspending Britons could be damaging their access to competitively-priced loans. The study showed that some 19 per cent of people spend more money than they had intended to as a result of such peer pressure to buy luxury goods. However, managing director Jim Hodgkins reported by constantly spending beyond their means and getting into debt, consumers could well find themselves with an impaired financial rating when looking to borrow money again. As a result, those have in the past been turned down for a loan in the past but are confident that they will be able to make repayments may wish to look to a bad credit loan as an advisable way for consumers to get back on their financial feet.

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