Over borrowing rather than over lending has been the biggest cause of indebtedness among consumers in the UK, a survey of credit professionals has shown.

A survey of credit industry specialists by TDX Group shows that 74 per cent of respondents believe over borrowing was the key driver of over-indebtedness, while irresponsible lending was viewed as the second most important factor.

The research also shows an emerging picture of prudence among some debtors: fewer than 25 per cent of respondents identified those abusing credit as a growing category of debtor. Individuals are also looking to borrow less. Some 78 per cent of responses showed that debtors are less likely to use equity from their homes to continue to borrow.

A middle class home owner who needs temporary help was identified by 94 per cent of respondents as an emerging category of debtor. These heavily leveraged consumers represented some of the banks’ best customers in the past, but given the current economic climate, now find themselves unable to manage their debt as they have previously.

TDX’s study shows that credit professionals’ key objective is to determine those who will become good customers of the future and to maintain a supportive relationship through difficult times.

In spite of the current media focus on creditors and their practices only one third of responses felt indicated that consumers would blame their lenders for their debt problems.

Delays or avoidance behaviour by the debtor in making repayments were not seen to be a major challenge to credit professionals, with two thirds of respondents rating these as unimportant.

But these behaviours should not be completely discounted as debt collection agencies (DCAs) still recognise them as important. Denial was found to be the most important behavioural challenge in dealing with the indebted.

Source: Credit today