Research from Datamonitor suggests that those "systematically denied credit by mainstream lenders" will increase from 7 million to 8.6 million by 2011, which equates to one in four of the working population in the UK. 

Consumers face a personal finance squeeze following five increases in the Bank of England base rate over the past 12 months, rising taxation and the increased cost of living. As borrowers struggle with mounting debts, the number of people unable to keep up repayments is likely to increase, with those defaulting having their credit histories tarnished.

Mainstream lenders reject individuals for a number of reasons, including county court judgments, previous defaults, unemployment, bankruptcy or being in receipt of social security benefits, among others.

There are few indicators which suggest the credit bubble might be about to burst.  For instance statistics from the Council of Mortgage Lenders (CML) reveal the number of home repossessions in the first six months of 2007 has risen by nearly a third to its highest level for eight years.

County court judgments (CCJs) rose for a second consecutive year, the first such rise since 1991, with 843,853 CCJs recorded in 2006, an increase of 32.5% on 2005. The first three months of 2007 has seen 250,000 CCJs issued, the highest quarterly figure for a decade.

The number of people in England and Wales undertaking a personal insolvency procedure such as an IVA or declaring bankrupt increased by 33% in 2006, to 62,920.

The UK's total consumer debt, including mortgages, has risen to a massive £1.3 trillion, while savings have sunk to a 50-year low.

Industry experts believe the current level of consumer borrowing is sustainable only if the easy credit and low interest rates of the past few years returns. This seems unlikely, given the sub prime lending problems experienced in the US and uncertainty in the UK banking industry following the Northern Rock crisis.

A spokesman for the Consumer Credit Counselling Service (CCCS), a debt charity, said: "We expect problems in the future because mortgage debt is continuing to rise and the jury is still out whether we are going to have another rate increase before the end of this year."

Over the next 18 months the situation could get worse, with an anticipated 2.8 million borrowers set to move from cheap fixed rate mortgage deals on to their lender's standard variable rate. This could see their repayments rise by around £100 a month or more.

"The pain may not have hit yet as people are still on low fixed-rate deals, which will soon end," said the CCCS.

The likely ramification is that more people will be declined mainstream credit in the future, and instead will have to approach specialist sub prime lenders which are more expensive.