Parent-guarantors on the up among twenty-somethings
Many British twenty-somethings are using the "bank of mum and dad" to take out loans.
According to new research from financial website moneysupermarket.com, 23 per cent of 20 to 29-year-olds have used their parents as guarantor when applying for credit.
This is higher than the average across all ages, which stands at 11 per cent.
A loan guarantor works by promising to pay off debts for the applicant, if he or she falls behind on payments.
Tim Moss, head of loans at moneysupermarket.com, said that the credit crunch was to blame for this trend.
"It has been common for mum and dad to be tapped for some financial help towards a first home, but more and more parents are being asked to act as guarantors on a range of credit applications, including loans and mortgages," he commented.
"The tightening of lending criteria across the board has meant it's becoming difficult to even get a credit card or a loan, never mind access the most competitive rate on a mortgage [and] younger people are especially vulnerable in this climate."
Moneysupermarket.com also found that the highest level of parent guarantors were to be found in London, where 15 per cent had been used by their children in this way.
Regional Debt Advice; Debt Help London,