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Archive for Credit record

What affects your credit rating

Wednesday, September 10th, 2008

There’s a lot of confusion about credit ratings amongst people seeking personal loans and other forms of credit.

Many people believe – wrongly – that a credit record shows whether a lender has refused credit. This is not the case. Every time you apply for credit a ‘footprint’ is created on your credit record to show other financiers what you have been up to, but no record is immediately made as to whether you took up an offer, or whether it was refused.

One thing that varies from lender to lender is ‘how much is too many?’ Most of us are familiar with the concept that lenders looking at a credit record showing multiple applications may – quite rightly – view this as a sign of someone desperately seeking credit. As this is rarely the sign of a good potential client, many lenders will turn this applicant down on principal.

But how much is ‘too many’ when it comes to applications. Lenders will obviously vary, according to their criteria, but a flag usually goes up if more than four applications have been made at any one time. If the applications are spread across a period of months, the lender will be more lenient.
Another factor that people misunderstand about their credit rating is how much stability affects their core rating.

When you apply for credit – be it a mortgage, a credit card or a personal loan – the lender wants to know more than anything that you will be able to repay. The greater the risk perceived, the higher the interest rate charged, which is why bad credit loans can be so expensive.

Factors affecting this can be whether you are married – a sign of committment – whether you are registered as a voter, how many times you have moved house and even how many times you have moved job.

Someone who is seen as high risk is not necessarily someone with a history of missed repayments and ccjs, but maybe someone who has jumped from job to job, moved house or town many times and generally shown a lack of stability.

So, if you’re wondering why you weren’t offered the best rates available on the loan you wanted, you may need to look deeper than you thought.

Posted in Bad Credit, Borrowing, Consumer Credit, Consumer debt, Credit Card, Credit record, Debt management, Homeowner Loans, interest rates, Missed payments, Personal debt, Personal loans, Property, Secured loans, Tenant loans, UK Finance, Unsecured loans | No Comments »

Mortgage options

Monday, June 9th, 2008

Banks are getting increasingly tough on borrowers, and with high interest rates, mortgages are becoming increasingly expensive to service. So what options have you when looking for a new mortgage deal?

With lending rates so high at the moment and not expected to come down for a while, a tracker mortgage would probably not be the right option for anyone who cannot afford increased payments in the short term. Instead, taking out a short-term fixed rate loan would be a wise choice, to avoid being stung by higher repayments in the coming months.

If you have been in arrears recently then switching might be a bit more of a tricky issue since most lenders are now getting a lot tougher on borrowers with blemished credit records. Bad credit mortgages are available, but after last year’s sub-prime losses in America, these tend to be offered at very high rates.

You might not be able to take advantage of the cheap deals out there if you have recently gone into arrears or missed a payment, however there are still some sympathetic lenders out there who are willing to ignore the odd blemish on your credit history so make sure you shop around when you are looking for a good deal.

HSBC is currently offering something called a “RateMatcher” policy, which allows mortgage customers about to come to the end of fixed-rate mortgage to extend their loan for another one to five years at their current rate. This will prevent customers from switching out of an existing good deal to a higher rate elsewhere and should come as welcome relief to anyone whose cheap-rate home loan ends this year.

Posted in Bad Credit, Borrowing, Consumer Credit, Consumer debt, Credit record, Financial news, Financial products, Homeowner Loans, Homeowners, House buying, Housing news, interest rates, Missed payments, Personal debt, Property, Remortgaging, Secured loans, UK Finance | No Comments »

Credit Crunch versus Credit Cards

Friday, May 2nd, 2008

With the number of rejections for applications for credit cards on the rise it is becoming increasing difficult to secure credit.

As banks continue to tighten their belts when it comes to lending borrowers are being warned to prepare for rejection when they apply for a credit card. The people that are going to find themselves most likely to be refused are those with imperfect credit histories.

In the recent past it was assumed by most people that only those who had very bad credit histories, recent first time buyers and some buy-to-let investors were the ones who would find it difficult to secure credit. However times have changed in the wake of the credit crunch and more and more people are finding that they too are being rejected for credit.

Customers applying for cards and personal loans are finding that credit scoring has become tighter, with lenders giving more stringent reasons for turning down an applicant. Last year an applicant might have got away with making the odd late payment on a card or loan and it not affecting their credit score, but this year it’s a different story.

It has been revealed that the number of applications for credit cards that are being rejected has gone up by as much as 17% in the past six months. This means that roughly 3.27 million people across the UK have been refused credit in that period. This is a half a million more people than were rejects in the six months leading up to March 2007. Those of us who are most likely to see or application for credit rejected are people in the 25-34 year old age bracket.

Banks are also becoming increasing choosy over who they are willing to lend money to because the pool of money they have to disburse is so much smaller. With so many people looking for bad credit loans or low-deposit home loans, there are going to be a lot of disappointed borrowers.

Posted in Bad Credit, Borrowing, Buy to let, Consumer Credit, Consumer debt, Credit Card, Credit record, Debt management, Financial news, First time buyers, Homeowner Loans, Missed payments, Personal debt, Personal loans, Property, Secured loans, UK Finance, Unsecured loans | No Comments »

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