UK consumer credit increases in February
Apr 09, 2013 Simon Williams
Residents of the United Kingdom have experienced their share of struggles during the recession, but spending might finally be back on the rise.
The Bank of England recently released statistics that revealed consumer credit grew more than expected for the month of February, achieving a £600 billion year-over-year increase. An earlier survey by Reuters analysts projected that February would see just a £300 million growth.
The report was surprising not just because the increase was higher than expected, but because consumers have been largely shut out of receiving funding from many traditional lending avenues. Both small and large banks tightened up short term lending restrictions in the wake of the recession, leaving the vast majority of people at or near the subprime credit level out in the cold.
So what then has led to this growth? The rise of alternative credit has more than likely played a role.
Some alternative short term lenders employ Payment Reporting Builds Credit methods - as opposed to using traditional credit scores - to determine who is eligible for a loan. Because PRBC weighs factors like a person's past utility bill payment record, it has opened up funding to substantially more people.