Improving your chances of getting credit

Over recent years the UK has gone through something of a credit boom, where it has been relatively easy for many people – even those that have experienced past credit problems – to get finance ranging from credit cards and catalogue accounts to loans and mortgages.

However, the credit crunch that has taken a hold in the UK as well as globally has marked an end to this credit boom according to many experts, and this means that getting finance and credit may not be as easy as it once was for many people.

For those that have very good credit and are free of debt, have savings, and have a good credit history with a decent income the news is not so bad, as these are the people that many lenders are now going to be targeting in order to try and keep the finance industry afloat. However, those that have had credit problems, have tarnished credit histories, already have a lot of debt, and tend to live more in the red than the black are the ones that are likely to suffer the most.

If you are planning to apply for any form of credit this year, whether it is for a personal loan for your holidays, a car loan to purchase a new vehicle, or a mortgage to buy a home, then you should make sure that you prepare in plenty of time.

The tighter credit conditions in place these days means that getting finance may be more difficult for most of us than it was previously, and the more you do to help yourself the better your chance of getting the finance you need when the time comes.

The vast majority of lenders will carry out credit scoring when you apply for finance, so the first thing you should do is get a hold of a copy of your credit report and take a look through to make sure that all of the information is accurate and up to date. Although your credit report and rating can be adversely affected through missed payments and regular late repayments it can also be affected by things that have nothing to do with you, such as mistakes and inaccurate information on your credit report, or even as a result of identity theft.

If, when you go through your credit report, there are any issues then you should contact the credit reporting agency as early on as possible to get the problems sorted out. Another thing that you need to do is make sure that you keep up with repayments on all of your bills, debts, and other financial commitments, so that there is no adverse information logged on your credit report that could lead to rejections from lenders.

It is important to remember that if you are rejected for credit it leaves a black mark on your credit report, and therefore if you do apply for any form of finance and you do get turned down you must resist the temptation to apply again right away, as the chances are that you will be rejected again and your credit will take a further battering. Instead, make sure that you wait at least three months before applying for credit again, as this will increase your chances of getting accepted.

Another thing that can affect your chances of getting credit is not bothering to check the eligibility requirements of different lenders. This can vary wide from one lender to another – for example, one lender may accept people with damaged credit whereas another does not.

It is important that you check the eligibility requirements with each lender that you are planning to apply to, and do not waste your time applying for a loan of finance deal that you are clearly not eligible for.

One way around this problem is to use a broker, as these financial professionals have industry links with a wide range of lenders and will know which lenders are most likely to accept your application based on the information that your provide.

The broker will try and get you the best deal on finance based on your circumstances. So, if you have bad credit you should not expect to get the best rates on the market, but your broker will try and get you the best rate based on your credit and circumstances.

By preparing yourself before you apply for any form of credit you can really increase your chances of success. Always make sure that you make timely repayments on your bills and debts for at least the minimum amounts requested, and make sure that you keep an eye on your credit so that you do not get penalised for something that was not even your doing.