Millions of borrowers have been rejected for a new mortgage or loan at least once in the last 18 months, new research has found.

Since the beginning of 2007, 3.2 million consumers, one in 20, have had an initial application for credit turned down by lenders, who have been enforcing tighter criteria in the wake of the credit crunch. Around half a million borrowers went on to apply another four times for either a mortgage, unsecured loan or secured loan, according to GE Money Home Lending. 30,000 made more than eight applications before being accepted.

The sub-prime lender warned that the figures proved previously credit-worthy borrowers are increasingly seen as high risk by lenders, who are continually raising the bar for new applications. It also said that those who repeatedly applied for mortgages or personal loans risked making their situation worse.

Lenders make a log on credit records every time an application is made and deduct points for multiple applications.

Tim Moss, of Moneysupermarket.com, the price comparison website, said: "These figures come as no surprise with lenders tightening criteria on a daily basis. It reaffirms advice that people seeking credit shouldn't be using a scattergun approach. Multiple searches will only harm you credit rating. Instead, consumers need to do their homework and only apply to lenders with the right criteria."

Earlier this week a leading data analyst warned that the mortgage market would shrink by a fifth this year because lenders were enforcing stricter rules on lending. Datamonitor claimed that lending in the UK would fall by 19.3 per cent in 2008 and 3 per cent in 2009, despite recent rate cuts by some of the country's biggest mortgage lenders, including Abbey and Halifax.

Gerry Bell, of GE Money Home Lending, said: "The focus in the mortgage market is now on availability more than anything else, with financially strong and experienced lenders the most likely to offer credit. In addition there are a number of dedicated specialist lenders with strong pedigrees who may be able to help meet borrowers needs. Consumers should check their credit file to ensure it looks as good as it can and try as far as possible to only apply to lenders where there is a good chance their application will be accepted".