The best way of reducing risk of being classed as a bad debtor, is to improve your credit score and to ensure that a good record does not go wrong. For people who have been refused credit, or offered loans at atypically expensive rates, here are a few basics on how can you keep your credit file in good shape:

* Immediately register on Electoral Roll when you move house. * Pay all bills on time; it's recorded even if you're only a few days late. * Keep credit card balances low. * Pay off debt rather than moving it around. * Only apply for new credit when you need it. * Build up your credit history slowly, don't open lots of new accounts rapidly. * Check your own credit file to make sure it is correct.

Source: credit reference agency MyCallcredit (http://www.mycallcredit.com/)

However, should worst happen it is always best to immediately seek qualified help from free debt counselling services available including:

* The Citizen's Advice Bureau (http://www.citizensadvice.org.uk/index/getadvice.htm), * Citizen's Advice Scotland (www.cas.org.uk), * National Debtline (http://www.nationaldebtline.co.uk/) * Consumer Credit Counselling Service (http://www.cccs.co.uk/).

Recent announcements by Treasury delivered worst monthly public borrowing figures since records began in 1993, re-igniting fears over a possible rise in taxes.

Consumers are reducing amount they borrow on credit cards and analysts predict mortgage lending in UK will plummet by 10 per cent over next three years, as out of control growth in house prices finally stalls.

Independent market analyst Datamonitor claims, lenders who have been enjoying a boom in recent years, will struggle to maintain momentum and be forced to work harder to secure market share.

Investor Connections, a group of independent financial advisers, has called for an accurate assessment of UK's current economic position, after statistics showed three main asset classes, shares, bonds and property are all experiencing downward trends.

This downturn should spell good news for borrowers and homeowners, as mortgage and credit industries fight for customers and sharpen up on their competitiveness; however evidence of Lloyds TSB’s actions seems to belie this. With HBOS forced to criticise other credit card companies for failing to provide customers with adequate product information, despite repeated requests to do so from consumer lobby groups and watchdogs on Treasury Select Committee, it looks like majority of finance companies are currently out to protect themselves and their share-holders, with little regard for their customers. At a time when UK consumers are proportionately saving less than half of what they were 25 years ago, you might be forgiven for thinking that competition in banking world would be becoming increasingly cut-throat in order to gain customers’ business, but it seems that big institutions are instead looking to go down route of cost reduction to protect their profits. There are savings are out there to be made, but they are savings in costs to be made by finance companies, at expense of consumer, rather than beneficial savings for customer.