Although regulations surrounding the loan application have tightened since the onset of the credit crunch, credit checks are still not being carried out properly. According to uSwitch.com, 70 per cent of people in the UK – approximately 2.9 million – were not asked for any proof of earnings to back up their application.

A mere 663,617, just 21 per cent of applicants, actually provided proof of income. A staggering 15 per cent of those granted a loan did not even have to disclose how much they were earning on the application form. The company found that 4.1 million unsecured loans worth £29.9 billion were issued in 2007. And, as 45 per cent of applicants did not obtain their loan from their own bank, it is likely that issuing companies had little evidence of their credit worthiness.

Personal finance expert Mike Naylor says: “With more than 7,716 loan repayments being missed every day and record write-offs, you might think that lenders would have learnt their lesson, but the potential profits have clearly been too good to resist.