Despite the recent announcements of profits in the banking sector and the sizeable bonus payments that accompany this news (let’s not get into that!) one fact does remain.
- It seems to be getting harder and harder to be accepted for a personal loan in the UK.
This is due to a number of factors as follows:
- Purely and simply, banks have tightened their criteria for lending
- There is a smaller pot of money that banks are using to lend out to customers
- Previous credit records are being more closely scrutinised
Which to be honest is all underpinned by the fact that banks are looking to fundamentally change the structure and the risk reflected in their balance sheets. Having re-read this a number of times, your blogger is in danger of sounding like an ultra boring accountant, so lets look into what this actually means in more detail.
1. Banks are being asked by the coalition government (and the EU) to reduce the overall risks taken in their lending, to avoid a repeat of the recent financial crisis. In the longer term, this may see some banks be ‘split’ so that there retail divisions (everyday banking for you and I) are split from their investment arms.
NB: When the papers talk about ‘grotesque bonuses’ it is very rare for anyone in the Retail divisions to be in receipt of these substantial sums. Therefore, try not to get too angry with the customer services clerk who serves you in your local high street branch!
- The banking crisis and bonus culture cannot be attributed to he or she!
2. In response to being asked to reduce overall risk, the executive boards of major banks have decided that the overall amount of money available to lend to individuals and to small and medium sized businesses should be reduced. This means that there is the same amount of people competing for a reduced pot of money.
Specifically in response to reducing the ‘risky’ lending, it is considerably easier to tighten up lending scorecards to personal customers and small businesses. These scorecards are basically a list of questions, where the responses are used to make decisions on granting a personal loan or approving an overdraft or credit agreement. For retail customers these scorecards can prove to be very accurate predictors of what constitutes a ‘good’ lending decision.
During the height of personal borrowing in the UK, these scorecards were ‘loosened’ slightly, which meant that banks accepted that there may be a higher volume of cases which default, in exchange for obtaining an increased overall lending pot (and increased interest payments to fuel profits).
3. Finally, the executive management of many of the large UK banks have decided to go ‘back to basics’ and instead of borrowing money from international markets, in order to lend to retail customers, they would go about things in the traditional way. Encourage more savers to deposit with them, prior to lending out a safer proportion of saver’s funds.
Whilst this is a noble response, it also doesn’t take a genius to work out that when the average savings deposit account on the high street pays less than 1% gross interest (and the UK inflation rate soars towards 5%), depositing funds into a high street bank is a less than attractive proposition.
- So, where does this leave you, the borrower, looking to obtain funds to allow you to purchase that new car, or build the extension at the back of the house?
At Lewis Alexander, we specialise in debt management advice and advice if refused a loan, we may be able to help you obtain access to borrowing if you qualify.
One free call to our personal debt and personal loan advisors on 0800 018 6868 could help you understand how you can restructure your existing borrowing or rectify your credit rating.
- Our advisors are all professionals and will treat your call in the strictest of confidence.
- So call us FREE today to see if we can assist you in your borrowing plans for 2011!
- Call 0800 018 6868
- Did you know it was possible to improve your credit score without actually having much funds available in your personal bank account?
- It is even possible to obtain a good credit score after having a bad credit rating, when living in and out of a personal overdraft!
To increase your credit score or improve your credit rating you need to pay any credit account you have on time and make sure your payments are for the correct amount. It does not matter how much money you have in your bank account. It is as simple as that, if you are struggling with credit accounts get rid of them where possible.
Start a fresh and gain control on a monthly or weekly basis!
Car finance and all other types of credit agreements are listed on your credit report so it is important too keep up with all agreements not just the ones that are important to you.
Most people suffer from a bad credit score due to not being able to keep up with regular monthly repayments, some months they encounter extra unexpected living costs, such as motor breakdowns and domestic appliance problems.
- These tend to need immediate attention which costs and these costs are what tend to set the individual back.
When payments are then missed for credit accounts, the credit companies are duty bound to update the credit reference agencies monthly such as Experian and Equifax. These credit reference agencies keep your credit file up to date so that when you apply for any borrowings or credit, the lender you are applying too has the right with your permission to search your credit file for any information they may require to either approve, or decline your application.
- When an application for credit is refused or turned down, the lender is under no obligation to tell you why. This can often offend people but the policy not to disclose the reason for decline is normal practice within the credit industry.
If you have never seen a copy of your credit report, it can at first take time to understand. Once you have seen it you will feel more comfortable looking at it next time you need to, and so on. It is important to keep a check on your credit report as this can inform you of any searches that have been made in your name without your awareness.
Credit Expert from Experian is the most well know of the credit reference agencies that allow you to view your credit report online. They offer a free 30 day trial. This is a trading name or brand of a company called Experian who advertise on Television, you may have seen the credit expert TV adverts.
Lenders use different parts of your credit report to assess if they are able to lend to you, this differs from lender to lender. If you make multiple applications for credit and get refused within a short period of time, say one day to a week or even within one month, you can reduce your credit score that way, so be careful when applying for credit.
Prospective lenders do not like to see many refused applications for credit within your file over a short period of time, it can show that you are desperate to obtain the credit and this can worry a lender.
If you need advice regarding clearing personal debts after suffering a bad credit history, you can call our personal debt helpline 24 hours a day in total confidence using 0800 018 6868.
Lewis Alexander is registered in the UK to help and assist consumers with personal debt and other financial problems.
We are specialists in personal debt management consultancy and help many people every day to clear and consolidate personal debt problems.
- Personal Debt Consultants at Lewis Alexander will not charge you for advice!
If you are suffering from excessive charges and interest rates that are being applied to your credit agreements then you should take advice from a personal debt consultant sooner rather than later.
- Do not stick your head in the sand like an Ostrich, get professional advice from trained personal debt consultants.
Your creditors will be sympathetic to the problem you find yourself with and you should approach them with details of changes in your circumstances or with reason for the lack of your ability to repay.
When credit and debt becomes a problem, it can seem as though you are the only one suffering, this is not the case, if we all could see inside other peoples wallets, we may find a lot of other people in the UK are currently suffering from the same financial problems.
Personal debt consultants can help by advising the best solution to take with advice tailored to your personal situation.
Some people just carry on day after day hoping that the problem will go away, unfortunately it does not and often it will get larger over time if not dealt with.
You must accept that you are not alone and personal debt consultants can help you, they are specialists in what they do and even though all of us are different, the problems we face financially tend to be the same.
If you would like to speak with a trained personal debt consultant in total confidence today, then please call our personal debt helpline using 0800 018 6868, lines are open 24 hours, 7 days.
- Do you need help to clear debts in the UK?
- Are you struggling with your monthly repayments?
- Refused loans to consolidate personal debt?
At Lewis Alexander we understand how personal debt problems can impact on your daily life and we offer help and assistance to clear your debts without another loan. You do NOT need to take on further credit or loans to clear credit card debts or other unsecured credit agreements.
You can start by exploring proven debt solutions such as a Debt Management Plan or IVA (Individual Voluntary Arrangement).
Debt solutions such as bankruptcy are usually the last to be considered and also the most severe! Please remember that you should not pay debt companies for advice about how to clear personal debts.
There are many different ways of finding free help to clear debts, many sites online will offer information that when put together, gives you a broad but at times detailed explanation of solutions available to clear personal debt.
- Should you really trust the companies you owe money to when looking for help to clear debts?
Help to clear debts in the UK is usually chargeable when you use the services of a debt management company or Insolvency Practitioner that you would be expected to make repayments via a third party, other than when starting one of those two options, no individual should be asking you to part with any money unless you owe it directly to them.
- It is very important that people consider all options available when obtaining help to clear debts!
Apart from the main 4 solutions (debt management plans, bankruptcy, Consolidation loans and Insolvency) there are no magic ways of wiping out debt, unenforceable credit agreements do exist but not in the numbers that some companies are advertising!
- Debt management should only be entered into with the right company, do your homework!
- An IVA should only be entered into with a licensed insolvency practitioner
- A loan to clear debt should only be taken from a licensed credit broker
- Bankruptcy is entered into through your local county court
Be careful of being charged upfront fees for help to clear debt and services that may not even exist, some companies are charging people for loan applications to clear debts and these people are finding that loans are still not available to them, even though a fee has been paid!
Should you wish to discuss you personal financial issues with a trained personal debt advisor and simply need help to clear debt, please call our free from a landline personal debt helpline using 0800 018 6868, our staff are UK based, lines are open 24 hours /7 days a week and your call is FREE. All calls are dealt with in confidence.
