Credit specialist Veda has found that around 750,000 Australians are at risk of falling into an uncontrollable debt spiral if the country experiences an economic downturn.

 

In the company’s Australian Debt Study, Veda found that 21 per cent of Australians are struggling to pay current credit commitments. Despite this, nearly a quarter of those surveyed said they will apply for more credit to help them cope with an economic downturn.

 

Veda's analysis of consumer behaviours if there is a period of economic stress shows:

  • Most (66%) Australians would draw on household savings;
  • One in four (25%) would increase their credit card limit, mortgage or loan;
  • One in three, or almost 5.5 million, would borrow from family;
  • Over 3.6 million (21%) would draw on their superannuation.

 

"Credit reports do not show a person's credit limit, or if they are failing to make the minimum payment on their credit cards or loans. It makes it easier for someone already in trouble to get yet more credit - pushing further into a downward debt spiral,” Veda’s Matthew Strassberg said.

 

 

The survey found that few who struggle to manage their credit seek professional advice, with black marked debtors staying on a credit report for five years.

 

Veda’s findings come as the Federal Government prepares to introduce long awaited legislation that will allow for better information on consumer credit reports.