Extract of the Introduction

This paper aims to identify, clarify and document the various dimensions that make credit risky, or even toxic. It does not cover the risk inherent in credit activity as such, since with all credit arrangements, there is a possibility that the loan may not be paid off in the way planned – or indeed, not paid off at all. Consumer credit is especially vulnerable to this risk, as it allows consumers to spend money they do not have in ways that do not create an income stream or future value.

The aim of this paper is to identify mechanisms that increase the risk of arrears or default for consumers, by looking at how credit is designed (terms and conditions) and how it is sold on the market. The study looks at the work of a subjective selection of influential authors who have contributed to a comprehensive understanding of credit issues and how to tackle them; credit seems to have attracted much interest since its early development and the authors are numerous and diverse.