Are loans available at the moment?
It`s no secret that the financial crisis has made getting loans and other forms of credit more difficult. In many ways, the `credit crunch` isn`t over yet - lenders are still cautious about their lending.
Just a few years ago, lenders were much more relaxed about who they lent money to. But nowadays, even people who feel they have a strong credit rating may find themselves rejected for loans, credit cards and mortgages. So how can you improve your chances?
Is it even possible to get a loan?
The simple answer to this is yes. If you look at the website of any major bank or building society, they`re still advertising their loans - and the best deals can come with surprisingly low interest rates. It`s clear that lenders still want to do business.
However, the way lenders do their lending has changed. Most will no longer offer loans to people they aren`t reasonably sure about - so if you`ve struggled with credit in the past, you might find it tough to get accepted. People who have little experience with credit in this country might also have some difficulty.
There are some loans that are more easily available to people with a poor or average credit rating, but these can carry a much higher interest rate than loans for people with a strong credit rating.
Homeowners with a less-than-perfect credit rating might have more success applying for a secured loan - but keep in mind that if you fail to keep up with secured loan repayments, you could be putting your home at risk. And there`s the question of equity: your home would need to be worth a fair bit more than your outstanding mortgage to secure a loan against it.
Improving your chances of getting a loan
There are a few things you can do to increase your chances of being accepted.
Check your credit history
All three UK credit reference agencies (CallCredit, Equifax and Experian) offer facilities for checking your credit history. This enables you to see the kind of thing lenders will see when they`re considering your application.
Just as important, it enables you to spot errors that could be holding you back. Sometimes, lenders (or other companies, like utility providers) might have accidentally left an incorrect entry on your history. If you spot anything like this, you have the right to get it corrected.
Be patient
Don`t apply for several loans at once. Too many applications in a short space of time might make some lenders suspicious. If you`re rejected a few times, it`s best to wait at least six months before applying again - you can use that time to work on improving your credit rating.
Use existing financial products carefully
The more you use things like your bank account and credit cards without any problems, the more you`ll be demonstrating to potential lenders (via your credit history) that you can be trusted with money. Over time, this can improve your chances of being accepted for a loan.
Related resource:
- Tips for getting approved for a loan
- How to get a loan in the credit crunch
- Can I get a loan if I`m in debt?
- Why can`t tenants get secured loans?
- Loan Calculator
- Debt Consolidation Calculator
Fill in our form for your free loan quote
Tags: loan, loans, loan application, secured loans, credit rating, poor credit, lenders, mortgage lenders, credit, unsecured loans