CREDIT SURVIVAL GUIDE - What to do to survive the Credit Crunch!
Always bear in mind that each lender will very often assess your application for credit in a different way. Some could also use differing criteria for the different deals they have on offer. You could easily end up in the situation where one lender might refuse you while another will not.
The key to making a successful credit application is to understand your own credit profile and find the right deal that suits your situation.
How are you coping with Debt ?
Recent research indicates that 15.4 million UK residents cannot even quantify their own debt to within £100.
The situation is actually worse among the 18 to 24 year old age group, where 41% do not even know their current debt burden to within £500!
By checking your personal credit report you will be able to see the whole history of all the credit you have had, including any loans, credit cards or mortgages, as well as your actual repayment record and whether you have had any court judgments taken out against you, plus a lot more!
Your credit report provides a snapshot in time of exactly what you currently owe to lenders and credit organisations, and more importantly how well you are managing your financial affairs.
This detailed information on your report should enable you to calculate how much you need to spend on essentials and how much you should have leftover.
Do not assume however that you can just blow what you have leftover. Make sure you always have something kept back for emergencies.
It can also help you to set up direct debits for those regular bills you get every month and you could even get a discount for using their direct debit facility.
Perhaps the greatest benefit is that this will ensure you are always on top of your repayments. This is extremely important because if you fail to pay what you owe on time then your credit status will be affected.
Understand what lenders are looking for on your Credit Report
Lenders consider relevant information from your credit report as well as what you write on your application form.
They then allocate a value to particular items and use their own individual formula to calculate your credit score and credit rating. This score is a number, which then represents the risk that you will pay or not repay what you owe.
The higher your score, then the easier it should be for you to borrow and you should find that you get better interest rates as well.
It’s good to talk to your Lender – seriously!
It’s always good to talk and you should let your lender know in advance that interest rate rises may cause you problems. Do not just hang on in there and miss a few payments without speaking to your lender first
Details of payments you miss or make late will be kept on your credit report for up to 3 years!
If you find that you are starting to or already struggling to make ends meet each month, then you will find that lenders are willing to work with you to determine a sensible repayment schedule that you can actually afford, rather than have you default on your debt.
Build a Better Credit History for Yourself
There are many different ways in which you can improve your credit record and therefore your chances of getting the credit deals and loans you want.
You could totally pay off one of your credit cards or consolidate several different debts into a single more cost-effective loan.
Another simple step you can take is to register to Vote.
Lenders look up your details on the electoral register when you apply, so that they can check that you are who you say you are and live where you say you do.
If you do not appear on the electoral register at the address on your application form they could easily mark your credit score down or even just refuse your application straight away.
Carefully check your credit report to make certain that it is totally up to date and accurately reflects your current circumstances.
Remember that even something as small as a simple clerical error on your credit report could damage your credit rating.
If you disagree with anything you find on your credit report, however small, then contact the source of the erroneous information. This could be a lender or even a court.
Ask them to correct the mistake you have found and be aware that you may need to provide proof.
Credit Repair is good strategy when you have bad credit.
Don’t go Bankrupt – REALLY – just don’t!
Unfortunately there really is no quick fix for debt.
Bankruptcy or its close cousin, the Individual Voluntary Arrangement or IVA, may both first seem like very attractive propositions, but they will both taint your credit history for many years to come.
Information about your Bankruptcy or IVA will stay on your credit report for at least six years even after they have been discharged or completed, respectively.
When they see details of a Bankruptcy or IVA on your credit report, Lenders will be much less likely to offer you any sort of credit, as they will regard you as a high risk individual.
If you start to think that insolvency might be in any way a realistic way of dealing with your debt, please make sure you quickly seek expert and impartial advice before proceeding.
Always Get the Best Expert Advice
If you are really worried about how you are going to cope then you can get free expert advice from one of the following organisations:
Citizens Advice Bureau at www.citizensadvice.org.uk
Consumer Credit Counselling Service at www.cccs.co.uk
National Debtline at www.nationaldebtline.co.uk
Also view your free Experian credit report with a 30-day trial of CreditExpert
Credit Survival Guide Checklist - Beat The Credit Crunch!
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Always make sure you shop around for the very best deals on all the financial products you need to purchase, such as credit cards, loans, mortgages, insurance policies, different utilities and mobile phones.
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Start managing all your accounts online and pay all your monthly bills using a direct debit facility as this can save you money each month.
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If you are having problems making your mortgage repayments then speak to someone at your mortgage lender as soon as you can. Also consider re-mortgaging if there are better deals currently available. Speak to a mortgage broker and ask them to find you the best deal for your situation.
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Create a monthly budget and make sure you stick to it, but be sensible and realistic about what you can afford.
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Always pay your bills on time, but at the same time make sure you do not go over any of your overdraft limits.
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Look at consolidating your current debts. Check what interest rates you are currently paying on your accounts and credit cards and compare these with what is currently available. Remember though that a lower monthly payment may cost more you more in the log run if the period for repayment is extended over a long term. However, it may also get you out of your current bad debt situation and allow you to rebuild you credit status.
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Try to make the most of the current high interest rates savings accounts available today by making sure any regular savings you have are earning the best return possible.
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Finally check your credit report for free with CreditExpert, the credit report monitoring service from Experian.
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Click here for your Free Credit Report.
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