Credit card lenders may be providing consumers with credit they will find difficult to repay because of a failure to check applicants’ incomes, debt consultancy firm Thomas Charles has suggested.

In recent comments, James Falla, managing director of the group, urged lenders to establish how much debtors could afford to repay before approving credit. Furthermore, responding to instances in which consumers have made falsehoods in their application in order to improve their chances of getting a new credit agreement, Mr Falla warned that people may just compound their existing levels of debt by taking on a financial responsibility that they cannot realistically meet.

“That’s not a new thing – that’s been going on for a long time, because many people we meet in our line of work are in that very position. They’ve got to the point where they can’t afford to pay monthly bills and so the first thing they do is apply for a new credit card which gives them extra facilities from which they can draw upon to pay the other credit off,” he commented.

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With money markets tightening, Mr Falla insisted that many consumers may increasingly find themselves in a position where creditors are looking to secure lending against the value of their property in an effort to minimise the risk of debt not being repaid.

He noted that in the past, instances in which creditors had been unable to retrieve debt there was very little they could do. However, he suggested that while credit cards are generally unsecured forms of lending, many creditors who are experiencing difficulty getting consumers to meet repayments are now turning to the courts in order to have the debt secured against their home.

“What that will then mean is that people in debt difficulties may start seeing increased pressure in situations where they’re looking at repossessions and that kind of thing,” he concluded.

Mr Falla’s comments came in response to a recent study conducted by uSwitch which indicated that 84 per cent of successful credit card applicants were not asked for a proof of income last year. The report also found that 14 per cent of respondents were not asked about their salary or monthly outgoings during their application, while only eight per cent were called upon to provide proof of income.

Concluding, he urged credit card providers to improve their approval practices to make sure that consumers could actually afford to repay the arrangements they entered into.

Earlier this year, financial advisory service Callcredit also identified that many people are resting on unstable savings, with 40 per cent of people said to be unable to meet living costs for more than a month if their income dried up.

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