How To Lower Your Chances Of Getting A Loan
Bad Credit Loans - April 23rd, 2012This may seem like a rather strange title for an article, but then again some of the behaviour of consumers in the UK who may be looking for a personal loan, could lead you to believe that they were deliberately trying to make their loan application harder for themselves.
Since the credit crunch, it has become much harder for a borrower to be accepted for the loan they require, even if they have a good credit rating. Whether it is for a personal unsecured loan for just a small amount, a credit card or a larger secured loan or home owner loan, the majority of lenders now take a much stricter view when it comes to their loan underwriting criteria.
A person’s credit history is looked at in much more detail than it used to be when they apply for a new loan or other form of credit and as well as this, a lender is likely to consider the applicants employment status, job security and affordability of the new loan before it is approved.
Don’t get me wrong, there is still a good choice of cheap loan deals on the market, for all types of loans, but to obtain the best loan rates, a potential borrower needs to have a clean record and a good credit rating.
There are several things which can make a difference to a loan application, which could determine what interest rate the applicant will be charged on their loan, or even if they are likely to be accepted for the new loan at all and many of these factors are under the total control of the borrower.
Many people stay on top of their financial situation on a regular basis, ensuring that all their loan commitments and repayments are made on time and that their credit file is in order and kept up to date. However, others do not take the same level of care, yet still expect to get the best loan rates and deals which are available.
Here are a few tips and recommendations which could help improve a person’s credit rating, or even go some way to repairing it if they have had poor credit and loan arrears in the past:
First of all, a potential borrower should ensure that all their existing credit arrangements are up to date and they have no loan arrears or missed repayments. This not only includes personal loans and credit card repayments, but also includes things like council tax and utility bill repayments, as these can also show up on a credit file, particularly if the account is in arrears and the company has taken recovery action against the person.
This information is held on a person’s credit file, which is readily available from any of the major three credit rating agencies in the UK, which are Experian, Equifax and Call Credit. For a small fee, a person is able to obtain a full and detailed credit history for themselves, which will show how their various accounts and loans have been managed, as well as giving them an overall credit rating.
Practically all lenders will use the information held on a credit file to assess a person’s credit worthiness, so it is a good idea to ensure that this information is kept up to date. Although the information held on an individual’s file is usually fairly accurate, it is still possible for errors to occur, or the file not being updated where necessary.
An example of this could be where a person has had loan arrears in the past and possibly a County Court Judgement (CCJ) as a result of this. This information will show up on that person’s credit file, detailing the arrears, the amount of the CCJ, who it was in the favour of and the court where it was issued.
However, if the borrower had then paid up the loan arrears and cleared the CCJ, obtaining a certificate of satisfaction, they should check their credit file to ensure this information has been updated, as this can often be missed. If this is the case, they should contact the credit reference agency with the details and this oversight can then be rectified.
Similarly, if a person’s name or address is not correct on their file, this could also have an impact on their ability to obtain a personal loan or other credit.
Having an up to date credit file is one of the most important factors in getting a cheap loan deal, but there are also other factors which can influence the decision. Many lenders will use the electoral role to check a loan applicant’s address details are correct. If they are not registered, or appear at another address, this will also lower their credit score and reduce their chances of getting a loan.
In many cases, people want to shop around for the best deal on a cheap loan and as a result of this, think they are doing the right thing by making a loan application to a number of lenders all at the same time to see who comes back with the best loan deal.
Whilst it is a good idea to shop around for a good loan deal, every loan or credit application will incur another credit check on the individual and each score which is carried out will leave a mark and lower that person’s overall credit rating, so it is therefore important to not apply for lots of credit all at the same time, even if you don’t intend to take all of it out.
So if you are thinking about taking out a new personal loan or other form of credit, carry out these few simple checks before you do so and it could make a difference to the amount of loan you are able to get as well as the interest rate which you are charged on it.
If there are problems with previous loan arrears, or incorrect information on you file, sort these out as soon as possible. It may take a few months to improve your credit rating, but by staying on top of these details, as well as your various loan repayments and commitments, you should start to see things moving in the right direction.



























