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Getting credit can be problematic at the moment. The banks have really tightened the reins and funds are in short supply. This means they can be a lot more selective in who they lend to. However, there are a number of things you can do to improve your chances. Whether you're applying for a credit card, mortgage or loan it's well worth spending a bit of time to make sure your house is in order before you apply. This could not only save you the disappointment of being turned down but could also mean you are offered better rates thereby saving you money - and no-one's going to argue with that!
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How To Stop The Credit Crunch From Becoming Your Credit Crisis
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Rejection rates for credit card applications are running at 18,000 a day, says one report - but the truth about credit is more complicated than headlines suggest.
Credit of any sort - from bank loans to mortgages and credit cards - has never been freely given by lenders. You have to prove you are in control of your finances. If you do, your chances of getting a loan when you need one will be greatly increased.
FREE Experian credit report with CreditExpert.
It's always been the case that lenders are choosy. Back in 2006 one survey showed some 3.5 million credit applications had been refused, with a similar number rebuffed last year, according to another. And an analyst's study last year found that up to 60 per cent of applicants for any form of credit have been refused.
If you are among those who have been refused credit recently or if you are thinking of applying for credit soon, don't panic - take action instead.
A good place to start is your credit report, which lists what you've borrowed and how well you're managing your repayments. It gives you a snapshot of your current status, what credit you've had in the last few years and how you have managed it. Your credit report can also help you to see where you could cut back and whether you could close some accounts altogether.
Lenders check it when they decide whether to make you an offer and what terms to set - such as interest rates. It is crucial that it's up to date and accurately reflects your circumstances. It pays to manage your money well because a better credit history makes you more likely to get a better deal.
To stop the credit crunch becoming a personal credit crisis, check this list of tips on further steps to take - and what to avoid.
- Actively manage your money
Don't miss any payments. Pay your bills and make repayments on cards, loans and your mortgage on time - you'll only rack up worse debts, incur penalties and damage your credit rating otherwise.
- Check your credit report regularly
It will change as your circumstances change, so you can see how well you're doing and it can act as a wake-up call if you've let things drift. Make sure that every entry is correct - a single clerical error could result in a rejection in the current financial climate. You can see your free Experian credit report with CreditExpert.
Continued....
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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
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