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Placing the blame for credit troubles

Jul 03, 2013 Simon Williams

When nationwide financial troubles arise, many consumers, economic institutions and government leaders often look for a specific event or group to blame. Many times, it's a mix of things - inflation paired with poor consumer confidence and a rising unemployment rate, for example.

However, after the dust has settled and the fiscal situation gets better, there is often more clarity on the cause of past economic obstacles. A number of British leaders think that is currently the case in the United Kingdom, and they are now laying blame on international parties regarding the debilitating credit crunch that recently affected millions of people in the country.

Foreign banks helped spur UK downfall
According to the Financial Times, the presence of international banks in the U.K. did nothing to help during the fiscal crisis that took place during the last few years. In fact, they may have made the situation worse. The Bank of England discovered that many of these institutions cut their lending in half when the first whispers of the Great Recession started in late 2007 and again in 2009. This was particularly significant, given that one-third of the banks in operation in the U.K. are owned by foreign entities, with more than 150 in total.

In fact, the study revealed that although British banks were highly criticized for closing their doors to would-be borrowers, they did so less frequently than their foreign counterparts, the news source explained.

The Financial Times also reported that despite the fact that the nation is pulling out of the recession, lending to citizens and businesses alike has yet to rebound.

Other options remain available
Though lending at both foreign and domestic banks remains unlikely for anyone without a significantly large credit score, consumers still have other options. Alternative finance companies like short term lenders remain a viable choice for those who ran into financial trouble in the past few years.

Even individuals or company owners with sub-prime consumer credit scores can still tap into money from these lenders. This is because these businesses don't take traditional rankings into account, instead relying on at least one out of the hundreds of other scoring models.

For instance, an increasing number of lenders are considering the Payment Reporting Builds Credit system, which creates scores using an individual's or business' tendency to make utilities payments on time, among other fiscal markers. These sorts of models can amass a more comprehensive picture of a person's creditworthiness.