Your credit record and debt consolidation loans
If your debts have become difficult to manage, then a debt consolidation loan might help. It could help you reduce your monthly payments, and make your finances easier to manage.
However, at a time like now, many people are finding that all kinds of credit - including debt consolidation loans - are becoming harder to obtain.
'Your Credit Record'
Your credit record is 'an important source of information which lenders use when they consider an application for credit'. So says a guide from APACS (the Association for Payment Clearing Services).
Called 'Your Credit Record', the guide explains how the way you look after your finances could affect your chances of being accepted when you apply for any type of credit.
In the current economic climate, the state of your credit record is more important than ever.
Approval and rejection
If you have been turned down for credit, you should talk to the lender. You may be able to find out why your application was rejected.
You could then try to improve your chances of being approved for credit in the future. How?
> Get a copy of your credit report. CRAs (credit reference agencies) charge 2 for a copy of your credit report. There are three major CRAs, and each records different information, so it may be worth getting in touch with all three.
> Look for errors. If you know something on your report is wrong, and can prove it, contact the CRA and ask them to either change it or remove it. You have a right to do this.
> Look for problems. Are you finding any real problems on your report that could be fixed? For instance, can you pay off any outstanding bills? This might improve your credit rating.
> Explain the problems. You can add notes next to any problems you find. For example, if you missed a bill payment, or fell into arrears, why was this? Potential lenders can read these notes, and may take them into consideration when making a decision on your application.
Debt consolidation isn't always the answer
It is important to realise that debt consolidation isn't always the best way for people to tackle their debts. As with any kind of credit, you shouldn't take out a debt consolidation loan if you're not sure you can afford it, or if you don't think your income is steady and reliable enough for you to commit to making those monthly payments as well as staying on top of your other financial commitments.
However, at a time like now, many people are finding that all kinds of credit - including debt consolidation loans - are becoming harder to obtain.
'Your Credit Record'
Your credit record is 'an important source of information which lenders use when they consider an application for credit'. So says a guide from APACS (the Association for Payment Clearing Services).
Called 'Your Credit Record', the guide explains how the way you look after your finances could affect your chances of being accepted when you apply for any type of credit.
In the current economic climate, the state of your credit record is more important than ever.
Approval and rejection
If you have been turned down for credit, you should talk to the lender. You may be able to find out why your application was rejected.
You could then try to improve your chances of being approved for credit in the future. How?
> Get a copy of your credit report. CRAs (credit reference agencies) charge 2 for a copy of your credit report. There are three major CRAs, and each records different information, so it may be worth getting in touch with all three.
> Look for errors. If you know something on your report is wrong, and can prove it, contact the CRA and ask them to either change it or remove it. You have a right to do this.
> Look for problems. Are you finding any real problems on your report that could be fixed? For instance, can you pay off any outstanding bills? This might improve your credit rating.
> Explain the problems. You can add notes next to any problems you find. For example, if you missed a bill payment, or fell into arrears, why was this? Potential lenders can read these notes, and may take them into consideration when making a decision on your application.
Debt consolidation isn't always the answer
It is important to realise that debt consolidation isn't always the best way for people to tackle their debts. As with any kind of credit, you shouldn't take out a debt consolidation loan if you're not sure you can afford it, or if you don't think your income is steady and reliable enough for you to commit to making those monthly payments as well as staying on top of your other financial commitments.
