Credit Crunch – Can I still get a loan?
Although it’s important to research the loan market properly make sure you don’t make multiple full scale applications at this time. Each loan you apply for will cause a record to be placed on your credit report and this can appear to a new lender that other lenders have been turning you down. This can very easily influence the decision of the new lender and you could find yourself refused for no other reason than those multiple applications on your file.
The best way forward then is to try and get loan agreements in principle without having the full credit search. Then compare whats on the table and apply for the loan that bests suits your needs. If a lender turns you down then you MUST find out why. Lenders are not required by law to tell you why you were refused but in reality most lenders will give their reasons. It is vital to get the reason for refusal and check the reason is valid before you consider applying for another loan.
What lenders look out for. Lenders need to know you can handle credit therefore if you have never borrowed money before you may not be offered the best rate. You may believe you are a worthy customer deserving of the best loan but you can’t seem to get it simply because you have no track record.
It’s a good idea to get a credit card and run it for a while responsibly for a while and also a mobile phone. Once you establish some track record the best rate loans may come within reach.
Make sure you are not overstretched. Lenders always look at your credit file to see how much you have outstanding on credit cards, mortgages and loans. They can easily see how you are handling payments. They will also look at your credit limits. Even if you are not currently borrowing on all your credit cards a lender could possibly get nervous about lending you more if he fears you might go on a spending spree. It’s probably better therefore to close credit card accounts that you don’t need.
Explain your special circumstances. If you have a bad credit record, or you are currently having some financial problems, it makes a lot of sense to seek advice rather than simply borrow more. If you have ever missed repayments in the past they remain on your credit record for at least 36 months. IVAs, Court judgments and bankruptcies stay on the record for at least six years.
Always explain if you have had a problem due to special circumstances. If you have been ill for example and it affected your earnings then you can add this information to your credit report and most lenders will probably take this into account when considering your application.
There are companies out there claiming they can repair your credit report. Stay away from these companies. Repairing your credit report is not possible unless someone made a mistake. If a mistake was made then you can repair your credit report yourself easily sp beware of these shysters, you will only end up being more out of pockets for something that simply isn’t possible.
There is usually a good reason for credit being refused to you. If you are struggling financially then the wisest step is first of all to review your spending. A good mover could be to consult with a debt councilling service.
One very simple and quick way to improve your credit rating is to register on the electoral roll if you aren’t on it already. Credit reference agency Experian tells us that lenders use the electoral roll as a precaution against fraud, to help check that you are who you say who you are and live where you claim to live. If you are registered at a different address to the one on the application form, or don’t appear on the electoral roll at all, they may ask for proof of residence or could simply turn you down.
Filed under: Business