Household International, the US financial services company, has had its credit rating cut after it reached a deal worth almost $500m (€506.4m) with industry regulators and attorneys from 20 US states to settle consumer complaints about its sub-prime lending practices.

Household, which stood accused of violating state laws by misrepresenting the terms of its loans, will create a fund worth up to $484m to repay its customers in what is believed to be the largest consumer lending settlement in history.