Saturday, January 05, 2008

Hope you don't need another credit card anytime soon...

Economy at risk from 'debt famine'
By Edmund Conway, Economics Editor
Last Updated: 1:11am GMT 06/01/2008

...The Bank's closely-watched new Credit Conditions survey showed that lenders had embarked on a dramatic clampdown on borrowers in both the household and the corporate sectors after turmoil in money markets across the world.

This will make it increasingly difficult to secure debt over the coming year, causing a rise in both personal and corporate insolvencies, the Bank said.

...Meanwhile, the balance of those reporting a worsening in credit availability in the corporate sector more than doubled to 51.8pc. In both cases, the lenders said they anticipated the situation would get even tighter in the first three months of 2008.

The survey also revealed that lenders were already making their credit scoring schemes - by which they decide whether to loan money to households - far stricter.

"This certainly is a case of going from feast to famine," said Michael Saunders, chief UK economist at Citigroup.

Living on credit cards, loans, and home equity is now no longer an option. What's left is living on your take-home pay voluntarily, or having a court make you do it involuntarily. Which will you choose?

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