In light of the recent ‘credit crunch’ that seemingly every financial expert and newspaper or website mentions whenever the subject of finances is raised, what does the ‘credit crunch’ mean for the average person in the street? How will affect our day to day lives in the future?

Some industry experts are predicting that by 2012 seven out ten credit applications, so applications for products like loans, credit cards or secured loans and mortgages, will be declined. Apparently this figure is now approximately one in two applications for a unsecured credit like loans or credit cards being rejected. Obviously, according to the experts, things are likely to get worse over the course of the next five years.

The very basic issue is that the ‘credit crunch’ has cost the banks a fortune therefore credit is becoming harder to get because the banks are more cautious about lending money to people. Because of this many people have to change their lifestyles in order to make ends meet and they cannot simply rely on credit to bridge that gap any longer. For others, unfortunately, it might mean that they slip into bad debt, if they fail to make repayments on their existing credit agreements.

The last ten tears have seen a massive shift in consumer awareness of the personal finance industry. The rise of the internet and then broadband has fuelled the increase in the numbers of financial comparison websites and so people have become savvier about what credit is out there and the offers available. People have been switching credit cards and applying for loans to bridge the gaps in their financial circumstances, or in some cases, people just get credit and spend it because it’s been so easy to get.

Then perhaps it should be no surprise that UK personal debt has reached an astonishing ?1,394 billion. Most of the late 1990’s and until 2006 has seen a huge rise in the buy now pay later culture, so perhaps some more responsible borrowing, from consumers and lending from the banks will not be such a bad thing after all.