Those looking to get a loan or access any other form of borrowing should get to grips with their credit report, it has been suggested.
According to Equifax, an increasing number of Britons are becoming concerned that their credit history may not be good enough to secure them a type of credit. The company’s announcement follows a decision by credit card provider Egg closing 160,000 of its accounts because their customers do not have a good enough financial rating.
Following on from this it is possible that prospective borrowers are increasingly unable to get cheap loans or other cost-effective financial products.
Neil Munroe, external affairs director for Equifax, claimed that the move by Egg reflects the general tightening of access to loans and other types of credit throughout Britain. He said: “Since the credit crunch last summer, we have seen a number of lenders tightening their credit granting criteria with the result that some consumers have not been able to get the credit deals they wanted. This goes to reinforce the fact that credit is not a right – and that consumers need to understand what lenders are looking for when granting credit and operating credit card accounts.”
The director pointed out that prospective borrowers must remember that money lenders not only want to ensure that customers can afford to make repayments but also look at them from a “profitability perspective”. However, it was suggested that although access to credit is diminishing, taking out a copy of their financial history could assist borrowers in getting a loan or other borrowing product.
He added: “What Egg’s decision does indicate more than anything is that consumers need to be as well informed as possible about how they look to a lender. Many consumers see the credit process as a complete mystery – something over which they have no control. But that doesn’t have to be the case.”
To help improve a credit file – which in turn may help to secure access to a cheap loan – Equifax advised consumers to ensure that they are registered on the electoral roll and that more than the minimum monthly repayments are made on credit agreements. By doing so the credit reference agency claimed that borrowers will be able to pay back their debts at greater speed and will be able to build up a positive repayment history. In addition, those who have gone through a change in circumstances, for instance being made redundant or getting divorced, which has seen them fall behind in making repayments, were advised to ensure that such alterations are reflected in their report.
For those concerned about their ability to manage their money over the course of 2008, applying now for a cheap loan could be advisable. In taking out this type of UK loan it is possible that consumers can meet a number of demands on their spending quickly and efficiently. However, getting a copy of their fiscal report beforehand may help borrowers to spot any discrepancies with their file, allowing them to rectify such errors with creditors and improve access to online loans.
Research carried out by Axa in December indicated that four million people think that problems in getting to grips with their finances have caused them to develop an adverse financial status. Those consumers who have a poor borrowing background but are confident they can now make repayments, however, could find that a bad credit loan is of assistance.