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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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Tue 1st Apr, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, UK Finance, Credit Card, interest rates, mortgages, Consumer debt, Homeowners, Spending, Unsecured loans, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Debt management, Missed payments, Tenant loans at 1:09 pm by admin
It has been revealed that more than one million people across the UK are using their high-interest credit cards to pay for their mortgages or their rent.
The figure which is roughly six percent of all households shows just how desperate some people are getting to keep a roof over their heads.
The figures which have been release by the charity Shelter show that more and more young people are struggling to remain on the property ladder and have been forced to take desperate measures, including the risk of long-term financial ruin.
The problem with using a credit card to pay for your mortgage is the amount of interest that credit cards charge their customers. Many credit card companies charge rates of between 15% and 18%. Rates like these are as much as three times greater than the rates applicable on the average mortgage. Paying your home loan with your credit card is a very risky and expensive way to avoid repossession or eviction.
The figures show in some areas of the country as many as one in ten people are using their credit card to pay for their mortgage. The people most likely to resort to this measure are in the 18 to 24 year age group. More and more people are finding paying for their mortgage or rent increasingly difficult as the credit crunch hits and unaffordable housing begins to take its toll on the consumer.
Experts are blaming lenders for the problem since the have allowed borrowers to borrow excessive amounts of money, not just on mortgages, but on personal loans, car finance and credit cards.
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Thu 10th Jan, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Homeowner Loans, Banking, UK Finance, Credit Card, interest rates, mortgages, Consumer debt, Homeowners, Financial products, Spending, Credit record, Unsecured loans, Borrowing, Personal debt, Store cards, Secured loans, Bank charges, Debt management, Missed payments, House repossession, Tenant loans, Overdrafts at 2:06 pm by admin
Before signing any contract or deal you are always told to read the fine print, and this is for a good reason. Most of the important information that is almost always overlooked is mentioned in the fine print of the document. Often this may include default terms or the eligibility of a good interest rate offer on a cheap loan or credit card. It is estimated that as much as six million consumers fail to read the small print of their contract or transaction.
A recent study reveals that more than fifty percent of adults admitted to not reading the small print when buying financial products, mobile phones or electrical goods. This is disturbing as often the lack of understanding of the fine print in your contract can lead to major problems or, in extreme cases, financial ruin. Once a repayment contract on a credit deal – such as a mortgage or personal loan – has been breached, penalties and charges can snowball, putting the consumer at risk of losing their home.
One of the most important contracts where fine print must be completely understood is the credit card agreement. All credit card companies are in the business to make a profit off their customers and with the Office of Fair Trading cracking down on unfair charges, credit card companies must then find other ways of making a profit. Some of these ways include cash withdrawal fees, foreign usage charges; higher interest rates if the cardholder defaults as well as shorter interest-free periods. It is important that consumers first read over the fine print of the credit card agreements before activating an account. Often credit card holders fail to read over their agreements properly and overlook items such as handling fees for balance transfers or the high interest rates that are charged on cash withdrawals, and in some cases credit card providers are allowed to reprice a contract should the cardholder default on payments, which means they can then start charging a higher interest rate.
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Posted in Consumer Credit, Personal loans, Banking, UK Finance, Credit Card, interest rates, mortgages, Savings, Financial products, Spending, Unsecured loans, Financial news, Borrowing, Secured loans, Bank charges, Debt management, Tenant loans, Overdrafts at 2:03 pm by admin
No matter who you are, when it comes to your personal finances, so much depends on the deals that you get from your bank. With just a few big high street banks out there dominating the market, you should really pay attention to the deals that they are offering you on your financial services.
A new report by the Daily Mail shows that most of the high street banks have some excellent deals out there on some of their products, they also have some really terrible deals that will be offering customers terrible value for money and will not be very good financial choices.
Whether you are looking for a personal loan, paying off your credit cards and looking for a better rate while you do so, or simply like to save a few pounds each month for rainy day, by carefully selecting what you say yes to and what you say no to, you will be able to take the good while avoiding the bad deals that are available from the banks.
For example, while the Abbey is paying 7.25% pre-tax on its fixed rate monthly saver account - an excellent rate in the current market - it reduced the rate that it pays on its instant access Isa at the end of May from 5.6% to 4.55% and 5.25%. This is a huge difference on what you will be paid from the same institution.
Meanwhile, other lenders are focusing their advertising on the great rates they are offering on loans and mortgages, whilst putting the high arrangement fees in the fine print.
It pays to look closely at what your bank is offering and not assume the your own bank offers exactly the same products as the others. It is fine to shop around. It is virtually certain that some of the offers they give you will be great, and some will be terrible, so read them, be a discerning consumer, and choose the options that suit your needs.
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Posted in Consumer Credit, Personal loans, Banking, UK Finance, Credit Card, interest rates, Savings, Financial products, Spending, Unsecured loans, Financial news, Borrowing, Secured loans, Bank charges, Debt management, Tenant loans, Overdrafts at 2:03 pm by admin
No matter who you are, when it comes to your personal finances, so much depends on the deals that you get from your bank. With just a few big high street banks out there dominating the market, you should really pay attention to the deals that they are offering you on your financial services.
A new report by the Daily Mail shows that most of the high street banks have some excellent deals out there on some of their products, they also have some really terrible deals that will be offering customers terrible value for money and will not be very good financial choices.
Whether you are looking for a personal loan, paying off your credit cards and looking for a better rate while you do so, or simply like to save a few pounds each month for rainy day, by carefully selecting what you say yes to and what you say no to, you will be able to take the good while avoiding the bad deals that are available from the banks.
For example, while the Abbey is paying 7.25% pre-tax on its fixed rate monthly saver account - an excellent rate in the current market - it reduced the rate that it pays on its instant access Isa at the end of May from 5.6% to 4.55% and 5.25%. This is a huge difference on what you will be paid from the same institution.
Meanwhile, other lenders are focusing their advertising on the great rates they are offering on loans and mortgages, whilst putting the high arrangement fees in the fine print.
It pays to look closely at what your bank is offering and not assume the your own bank offers exactly the same products as the others. It is fine to shop around. It is virtually certain that some of the offers they give you will be great, and some will be terrible, so read them, be a discerning consumer, and choose the options that suit your needs.
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Fri 2nd Nov, 2007
Posted in Consumer Credit, UK Finance, mortgages, Homeowners, Buy to let, First time buyers, Property, Financial news, Housing news, Tenant loans at 2:11 pm by admin
The strong demand in the rental industry is shown in the latest figures on void periods (the number of weeks that a rented property remains empty each year). Voids have been falling steadily over the past nine months, according to research by Paragon Mortgages. The annual average void period is now between 2.6 and three weeks. Tenant demand will remain high as property prices increase.
Keith Astill, managing director of UCB Home Loans, a subsidiary of Nationwide building society, said:
“People are renting for longer because it’s more difficult to afford to buy, which is in turn providing a boost to the buy-to-let sector.”
Halifax claims that UK property inflation is 10.7%. The figure is higher in Scotland, where house prices are have been increasing 15.9% a year.
Higher prices boost the value of the property, but also squeeze yields, decreasing the percentage of house price covered by the rental income. Yields dipped to 5.5% over the past 16 months, from 5.7% in June 2006, according to Birmingham Midshires.
This despite the fact that rents are on a steady increase, with the average increase of 4.5% in the last year to an average of £651 a month.
Tim Crawford, group economist at Birmingham Midshires, said:
“The fundamentals underpinning the buy-to-let sector remain sound. While house price growth is expected to be more subdued near term, reflecting the impact of higher interest rates, the potential for further increases in rents should encourage long-term investors.
“There also remains the potential for healthy long-term capital appreciation in the buy-to-let sector, particularly given the backdrop of more households being formed each year than there are new properties being built.”
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Thu 4th Oct, 2007
Posted in Consumer Credit, Personal loans, Homeowner Loans, UK Finance, interest rates, Savings, Consumer debt, Financial products, Property, Unsecured loans, Borrowing, Equity release, Personal debt, Secured loans, Debt management, Tenant loans at 11:10 am by admin
No matter what you want to buy, it seems that everything is expensive today. A handbag can cost £5000, a sofa can cost £10,000, but when it comes to borrowing, consumers need to consider the fact that the retail price is not the total price paid for the product.
A £50,000 wedding does not cost £50,000. Instead, it costs the original capital and the accumulated interest. While £50,000 will not buy a dream wedding any more, it does take a major chunk out of a person’s savings or home equity.
The important consideration when making a big purchase is value. Many people buy a £5,000 sofa instead of a £10,000 sofa. The first couch is worthless long before the loan is repaid. The second piece of furniture may not only retain its value, but it may even increase in value depending on the market and the demand.
The next thing to consider is the interest. Many people borrow on unsecured personal loans instead of secured loans. Releasing equity from your home can be a good idea if it saves you money.
Many people believe that finance companies cannot force the sale of a home to repay a debt if the borrower defaults. This is no longer true. In fact, a company can ask a judge to force the sale of a home for a relatively small loan. So, paying the extra interest for an unsecured loan, or a personal loan, is no longer ‘wise borrowing’.
The cost of borrowing has made it impossible to grab the first financial product offered.
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Wed 1st Aug, 2007
Posted in Consumer Credit, Personal loans, Homeowner Loans, UK Finance, Credit Card, Consumer debt, Spending, Unsecured loans, Financial news, Borrowing, Personal debt, Secured loans, Debt management, Zero percent cards, Budgeting, Tenant loans at 1:34 pm by admin
How much should parents spend getting a nursery ready for their new baby? Well, regardless of what you might think, new figures from Halifax Home Insurance show that the average price of kitting out a nursery is now £2,628. This is the average amount of money that people are spending on everything from designer furniture to autographed football kits and original works of art for their children’s new nurseries.
It appears as if many parents are living out their own childhood fantasies with the items that they are buying for their newborn children. While it is nice to see so many parents splashing out on their children, the fact of the matter is that their new babies will not remember or appreciate any of it.
As well as getting more fancy decorations, baby nurseries are also getting more high tech, with many parents installing televisions, two way baby monitors and even CCTV equipment so that they can monitor their children.
It is amazing how quickly the cost of such equipment can mount up. Even if you just stick to the standard equipment, you will find that it can be quite expensive to prepare for your new child, with clothing, toys, baby equipment and furniture racking up quite a bill by the time you’ve bought everything. With many parents already looking at reduced income once one parent stops working, loans and credit cards are being used to fund nursery purchases.
The important thing for parents to remember is that they will have their baby for life, and there will be a lot of expenses later on that will turn out to be more important for their child, such as childcare, medical care and education costs. Perhaps some parents should consider putting some of this money aside for later use, rather than spending it all before the baby is even born. Whilst cheap loans and zero percent credit cards can offer what seems a good way to buy nursery needs, getting into debt with little idea of what the future holds in expenses and income is probably unwise.
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Tue 3rd Jul, 2007
Posted in Bad Credit, Consumer Credit, Personal loans, Debt Consolidation, Homeowner Loans, UK Finance, Credit Card, interest rates, mortgages, Consumer debt, Financial products, Spending, Balance transfer, Unsecured loans, Financial news, Borrowing, Personal debt, Secured loans, Debt management, Tenant loans at 11:35 am by admin
Despite strong indications that consumers are improving their spending habits and the popularity of debt management programs, too many consumers are still using credit cards to pay utility bills and consolidate other debts.
This is forcing them further into debt by turning lower interest debts into high interest unsecured loans. Several credit card companies have promoted credit card schemes, like switching cards, as positive methods of reducing debt. However, the hidden fees sink many card holders.
The balance transfer is the biggest money grabber. Zero balance-transfer fees on 0% balance-transfer deals look good, but the fee is not part of the 0% deal. All new purchases are subject to interest at the purchase rate. There is also a fee for not making a purchases within three months. In fact, some companies will discontinue the 0% deal if the card holder does not meet a minimum purchase balance.
Cards also increase the consumer’s credit limit, usually when they are strapped and need extra cash. The objective of this scheme is to force the client to transfer debts to the card, increasing potential profits for the financing company.
Some cardholders have even put their mortgage payments on their cards, or transferred low interest secured loans to high interest credit cards.
Fees attached to cash withdrawals, checks with handling fees that are as much as £50, and a sliding scale of fees, all increase a card’s balance, even if the consumer is not making new purchases.
This type of new scheme is allowing financing companies to turn down record number of new accounts, while still increasing their profits.
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Fri 22nd Jun, 2007
Posted in Bad Credit, Consumer Credit, Personal loans, UK Finance, Credit Card, interest rates, mortgages, Consumer debt, Homeowners, Spending, Property, Unsecured loans, Financial news, Borrowing, Car finance, Car loans, Personal debt, Store cards, Secured loans, Tenant loans at 2:23 pm by admin
The retail industry has taken major hits according to recent reports. The increases in interest rates has many consumers cutting up their credit cards and using cash instead of high interest rate store cards.
Almost 25 per cent of consumers use shopping to relive stress, according to new research from Retail Trust, with the younger generation - 18 to 24-year-olds - favouring retail therapy as a viable solution to stress.
The report states that men are more likely to carry debt than women. Almost 33% of men owe as much as 20% of their current income in debts such as secured loans and hire purchase car agreements. Older men, over 40 carry the most debt including mortgages.
Considering retail and service industry workers as a demographic group revealed a startling trend. Employees in the retail and service sectors have the highest debts, with eight per cent owing more than 71 per cent their annual income. Most of this is in the form of tenant loans and other unsecured borrowing.
Nigel Rothband, chief executive at Retail Trust, highlights these workers as most in need of financial advice and guidance.
“It is estimated that an astonishing one in five people in Britain work in the retail industry and the survey results reinforce the fact that there are a large number of people in need of help and advice,” he told Retail Bulletin.
The government is instigating initiatives to regain control over debt and educate the publish. However, understanding debt is the first step to creating a viable a solution.
Credit Action reports that personal debt was £1,318 billion at the end of March, 2007, with the annual growth rate recording an increase of 10.5 per cent.
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