Credit Crunch - Can I still get a loan?
Although it’s important to research the loan market thoroughly 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 seem to a new lender that other lenders have been turning you down. This can very easily influence the decision of the prospective lender and you could find yourself turned down 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 are lenders looking for? Obviously it’s very important to the lender that you should handle the repayments of your loan and if you have been largely credit free in the past you might find it difficult to get the best rate for your loan. The only way a lender can judge your ability and attitude towards repaying loans is your credit track record so although you might think because you haven’t been borrowing regularly you’re a good bet the lender might not see it that way.
If you can show that you are capable of managing your money properly, maybe by having a credit card and a mobile phone and keeping them in good standing then possibly this might bring the best rate loan offers closer to you
One thing you can’t be when applying for loan is overstretched financially. Your credit records are there for all lenders to see and they can see immediately what your monthly commitments are and also how you have been handling those commitments. They can also see your credit limits so it’s a good idea to cancel any unused credit cards as those low limits could put a lender off you. If other lenders are only allowing a little then why should the new lender have confidence?
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.
If you are having trouble getting a loan make sure you stay away from companies who say they can repair your credit record. Unless a serious mistake has been made on your file this is not possible and if a serious mistake has been made then you can easily repair this yourself. Never fall into the trap of paying for credit repair or debt advice which means rescheduling debts.
Don’t borrow money to simply ease your current difficulties. Borrowing more means paying more back and you could be simply multiplying your problems. Review your spending first and try to trim any unnecessary spending before simply adding to your debts.
If your credit rating is poor a quick way to improve it is to register on the electoral roll. Lenders use the electoral roll as a precaution against fraudsters. This helps them to prove who you are and where you live. If you are registered as living elsewhere or not registered at all the lender could ask for further proof of residence or could even just refuse you.
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