Due to the credit crunch lenders can be reluctant to give credit. During times of economic prosperity lenders are more likely to be generous than when financial crisis hits the nation. However it’s still possible to be afforded credit during the credit crunch, if you are considered to be a good proposition for loan repayment.
Credit score
Before allowing potential clients to have a loan, creditors examine their credit rating score to see whether they have a history of financial wellness and have proven they’ve been responsible debtors in the past. Before you approach lenders with a proposition, it’s wise to look at your credit history. This can be done via ‘Credit expert’, who offer a free service.
What you see is what potential creditors will notice also. If you have a good history that’s great. If not, consider building up a positive score before attempting to obtain credit.
Remember that your credit score will be affected adversely if you have a joint account with a bad debtor. Wipe your slate clean by opting out of such an account and by opening a fresh one just for you.
Building a credit score
The way to build a successful credit score rating is to achieve a decent history via using a credit card. Making regular payments for goods on time will aid you in this. You can also gain a good credit rating by simply using a credit card responsibly. A prepaid Cash-plus credit builder card is a good bet if you don’t already have a credit card, or are finding it difficult to obtain one.
Add positive value to your credit score as-well, by having a store card from a retail outlet on which you make payments on a regular basis.
Understand different types of loans
There are two main types of loans customers can ask for. The first, and easiest to get if you are in the right position to ask for one, is a secured loan. When you ask for a secured loan you will need to have assets to set against it as collateral. For example, you may want to use your home to secure a loan.
You are far more likely to get a secured loan than an unsecured one, as your assets will put you in good stead for repayment. Although, other factors, such as where your home is located and property prices in that area, will affect the outcome. An unsecured loan is harder to achieve for most people, as nothing is being offered as a buffer against you defaulting in repayment.
Consider a personal loan
In times of economic downfall people don’t jump to lend money to others unless they know and trust them. If you have shown a wealthy friend or family member in the past that you’re responsibly when it comes to money, you may think about approaching them to ask for a loan.
In such a case, remember to get all financial dealings and agreements in writing, and to make a plan to show how and when you will pay off the debt.
Research
Even though a credit crunch is occurring don’t forget to shop around and read small print when it comes to getting credit. Don’t accept a lousy loan offer in the form of a huge interest rate on repayments that will take you years to pay back. Avoid loan sharks at all costs, and remember that, provided you can pay off any credit obtained, you will be considered an asset as a customer to creditors.
Obtaining credit when the world is financially uneasy can be tough, but not impossible. By making sure you’re a prime customer for a loan before attempting to get credit you can achieve success.
Sources
moneyexpert.co.uk
virginmedia.com