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Wed 10th Sep, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Homeowner Loans, UK Finance, Credit Card, interest rates, Consumer debt, Credit record, Property, Unsecured loans, Borrowing, Personal debt, Secured loans, Debt management, Missed payments, Tenant loans at 1:34 pm by admin
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.
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Mon 8th Sep, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Homeowner Loans, Banking, UK Finance, mortgages, Consumer debt, Homeowners, Property, Unsecured loans, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Bankruptcy, Missed payments, House repossession at 11:39 am by admin
In surprise news this morning, the US government has announced that it will bail out America’s two largest lenders, Fannie Mae and Freddie Mac.
Whilst this may seem far removed from the daily grind of most people’s lives, the effect of this action will have far-reaching implications around the globe and already has seen a positive affect on global stock markets.
Most UK homeowners will have never heard of either company, but together they are the largest holders of home loans in the world and as the saying goes, ‘when America sneezes, the rest of the world catches a cold’. In the last year they had been suffering unsustainable losses, as the American home loans market went into freefall and this was a large part of the credit crunch being felt by all.
Once confidence was lost in America, Asian backers stopped investing funds and the resulting lack of liquidity on the loans market has meant that everything from business loans to small personal loans has been affected by a lack of funds to be lent.
With this move - long overdue according to finance pundits - investment into America is likely to restart from healthier financial markets which experts hope will begin to halt the recession which is threatening to sweep the world.
What does this mean to the average borrower? Well, funds are unlikely to rush into the market instantly, but finance is a fast moving beast and so hopes are high that relief will be imminent for Western business and individuals. Particularly in America where an estimated 9% of homeowners are behind in loan repayments, risking repossession, bankruptcy and long term bad credit.
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Thu 4th Sep, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Homeowner Loans, UK Finance, Credit Card, mortgages, Consumer debt, Homeowners, Property, Unsecured loans, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Debt management, Missed payments at 1:46 pm by admin
Yesterday the government announced what were intended to be some sweeping measures designed to rescue both the housing market from its freefall.
The measures included helping out beleaguered homeowners who had fell behind on loan repayments; offering equity loans to buyers and giving a stamp duty holiday under a new threshold.
So far most commentators on the new schemes have been singularly unimpressed, particularly financial advice site, Moneysupermarket.com.
“The Government plans are certainly high on rhetoric, but lacking in fundamental help,” claimed Louise Cuming, head of mortgages at moneysupermarket.com.
Cuming states that some factors of the scheme are not just unworkable, they also encourage financial irresponsibility by bailing out homeowners who have dragged themselves into debt.
The view that the ‘British Debt Mountain’ is the fault of irresponsible lenders is a popular one in some quarters. Many have claimed that the vast amount of personal loan and credit card debt is due to lenders pushing ‘easy credit’ at borrowers who had little chance of repaying.
Cuming also points out that the plan for offering buyers 30% equity loans is also unrealistic: “this is simply a rehash of the tired old share equity story,” she says.
“This will inevitably only help a fortunate minority as it is co-funded by government and developers, and thus only available on an insignificant number of properties.”
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Thu 28th Aug, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Debt Consolidation, Homeowner Loans, UK Finance, mortgages, Remortgaging, Consumer debt, Homeowners, Financial products, Property, Unsecured loans, Financial news, Housing news, Borrowing, Secured loans, Debt management, Missed payments, House repossession at 12:29 pm by admin
An increasing number of households owned on bad credit mortgages are facing repossession as they make late loan repayments.
According to figures out from Standard & Poor, nearly a quarter of all bad credit home loans are now in arrears - many by as much as 90 days. This is up from 22% in the last quarter surveyed and now officially at a record level.
Comparison website Moneysupermarket have commented that this situation is of course attributable to the credit crunch, as nearly all homeowners have been faced with increased interest rates. For families who were already on a higher than average rate, a price rise can make it impossible for repayments to be met.
Additionally, the tighter lender criteria now in place across the loans market has made it nearly impossible for families to find cheap loans when a fixed rate deal comes to an end.
With fewer loan products on the market and many lenders pulling out of the sub-prime loans market, borrowers are having real difficulty in finding a bad credit loan at a price they can afford.
With reports on an increasing number of repossessions taking place and uncertainty in the jobs market, UK debt charties are bracing themselves for floods of enquiries. As colder weather sets in and fuel requirements rise, more families are likely to be plunged into the cyle of bad debt.
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Tue 26th Aug, 2008
Posted in Consumer Credit, Personal loans, UK Finance, Credit Card, interest rates, Consumer debt, Spending, Unsecured loans, Financial news, Borrowing, Personal debt, Store cards, Secured loans, Debt management, Budgeting, Missed payments, Overdrafts at 12:16 pm by admin
People are making a number of fundamental errors in handling their finance according to Moneyfacts, the comparison website.
It advises people to tackle their bad finance habits in order to stay afloat during these tricky financial times.
One of the worst habits is that of living beyond your means. This fatal flaw is going to see huge numbers of UK adults sinking under unmanageable debt in coming months. People who regularly spend more than their income each month are obviously mounting up debts that they can never tackle. Many of these people will end up using credit cards to pay for basic living costs and then taking out personal loans to clear the credit cards. This is a ticking timebomb, according to MyVesta, the debt solutions provider, and they should know.
Another poor habit is allowing yourself too many credit sources. If you hold a handful of cards each with a limit of thousands there’s always the temptation to splurge. Add to this a number of catalogue accounts or store cards and suddenly all kinds of avenues are open for spending on days when your income is all gone. Moneyfacts strongly recommends paying off the cards or accounts with the highest amount of interest and limiting yourself to only a few once the balances are cleared.
Not being aware of your current financial situation is a big step in the wrong direction. Whilst few people know their exact bank balance, it is always wise to have a handle on your rough debt balance. If you haven’t tallied up all the money you owe in overdrafts, hire purchase, credit cards and loans then you’re burying your head in the sand. By being aware of what you owe you remain in control and can decide which bills need clearing most urgently.
Above all, be aware of missing payments. Many creditors see this as a green light to either slap you with a charge or raise the interest rate on your borrowings. Or both! Whilst borrowing may still be fashionable, there’s no point in spending money unnecessarily. Especially during the credit crunch!
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Fri 1st Aug, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, UK Finance, Credit Card, Consumer debt, IVAs, Financial products, Spending, Unsecured loans, Financial news, Borrowing, Personal debt, Secured loans, Debt management, Budgeting, Missed payments at 10:35 am by admin
TDX Group, the organisation behind the Group Debt Index, claim that there has been a significant rise in the number of debt management plans taken out in recent months.
The Group claim that debt management, such as Individual Voluntary Agreements (IVAs) will rise by a further £5 million by Christmas, growing steadily by year end.
Mark Onyett, chief executive of the TDX Group said: “We’re already seeing far higher numbers of consumers struggling with personal debts and the pressure is set to intensify over the coming months.”
The research showed that an increasing number of people with financial problems are finding it difficult to make repayments on loan and credit card debts.
This accords with research showing the house repossessions are steadily climbing and a rise in people approaching debt charities for advice.
Since the start of the credit crunch many people have tightened their belts, but it simply isn’t enough.
Whilst most families are wise enough not to extend their credit with further personal loans, the increases in the cost of living has pushed many families deeply into debt.
Unfortunately, this Christmas could see many families hard pushed to pay their bills, let alone have the festive season of their dreams.
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Tue 15th Jul, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Debt Consolidation, Homeowner Loans, UK Finance, Credit Card, Consumer debt, IVAs, Unsecured loans, Financial news, Borrowing, Insolvency, Personal debt, Secured loans, Bankruptcy, Debt management, Missed payments at 12:44 pm by admin
The high levels of debt that Britons have built up over the past few years are finally coming back to haunt many households. The impact of the credit crunch is starting to take its toll on borrowers according to experts and it is expected that things are going to get much worse as the year progresses.
The accountancy firm KPMG has said that it is predicting that over 130,000 people are going to be declared bankrupt or enter into individual voluntary arrangements with their lenders. This will be up from the 109,615 who did the same last year.
When people enter into individual voluntary arrangements (IVA) they are allowed to restructure debts such as personal loans, credit cards and hire purchase so that their debts can become more manageable. Monthly repayments are made for a fixed period of time with the remainder of the debt being written off at the end of the period.
It is estimated that as many as 2,500 people have debt in excess of £100,000. In 2007 the average amount owed by individuals entering into IVAs was £50,300.
KPMG found that the average repayment for a loan on an IVA was 38% of debt. The average debtor repaid £19,000 of their debt and as a result £1.3bn had to be written off by creditors.
The high average level of debt indicates just how bad lending has been in the past few years. Most debtors owe so much that they have no realistic way of actually repaying their debt.
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Mon 9th Jun, 2008
Posted in Bad Credit, Consumer Credit, Homeowner Loans, UK Finance, interest rates, Remortgaging, Consumer debt, Homeowners, House buying, Financial products, Credit record, Property, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Missed payments at 1:07 pm by admin
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.
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Wed 4th Jun, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Homeowner Loans, UK Finance, Credit Card, Consumer debt, IVAs, Financial products, Unsecured loans, Financial news, Borrowing, Insolvency, Personal debt, Secured loans, Bankruptcy, Debt management, Missed payments at 12:46 pm by admin
It has been revealed that a rogue debt advisor company, unregulated by any watchdog, has begun to mail out leaflets to people in financial difficulty advising them to default on their loans. The company then offers to step in and help them to become bankrupt.
The company which is called the IVA Council (IVAC) is claiming that thousands of people in debt are each year being poorly advised on how to clear their debt. The IVAC also claims that thousand of indebted customers are being herded into formal debt agreements called Individual Voluntary Agreements (IVA) by creditors.
The company argues that these people should not end up living in poverty desperately trying to clear their debts but instead opt for bankruptcy. The debts could be on mortgages, personal loans, credit cards or utility bills, but the advice is the same each time: default.
The IVAC has mailed thousands of customers of debt advice services across the whole banking sector. The IVAC managed to get these details by buying them off the government-backed agency the Insolvency Service. This has prompted calls for the database to be made less readily available to the public.
Some recipients of these letters from the IVAC have complained that some sensitive information is clearly available in the display in the letter envelope.
IVAC has also set up a website that appears to be an almost exact copy of the Insolvency Service’s website. The company is also allegedly using an old logo of the Department of Trade and Industry (DTI) despite the fact that the DTI changed its name to the Department for Business Enterprise and Regulatory Reform last year.
The truth is that no one can escape their responsibilities and IVAs and bankruptcy are very serious measures that impact upon future credit for many years. They rarely mean that debts can be avoided. Instead the debtor is expected to repay loans and bills at an agreed rate, whilst living on the very same reduced income that this rogue company claims to help avoid.
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Fri 2nd May, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Homeowner Loans, UK Finance, Credit Card, Consumer debt, Buy to let, First time buyers, Credit record, Property, Unsecured loans, Financial news, Borrowing, Personal debt, Secured loans, Debt management, Missed payments at 4:44 pm by admin
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.
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