Less available credit could actually help financially vulnerable people get their heads above water, according to the Consumer Credit Counselling Service (CCCS).

Lenders are now rejecting more credit card and loan applications than before because they want to protect themselves from bad debt and as such have implemented stricter lending criteria.

A CCCS spokesperson, Tom Howard, said borrowers could benefit from this caution: "By protecting themselves lenders could also inadvertently be protecting irresponsible borrowers from themselves."

Mr Howard suggested that decreased credit availability will encourage consumers who live beyond their means to cut back and budget their finances to deal with the credit crunch.

He added that lenders should be more "receptive" to individual circumstances.

The 2008 Bank of England Credit Conditions Survey revealed that lenders have reduced the availability of credit to people struggling with the rising cost of living by more than it anticipated it would over the past three months.