Financial Guide to Improving your Chances of Getting a Loan

By: James Miller

This article mentions various terms commonly used with this topic. Here is a number of definitions. An arrear is a legal term and is a means to explain when you are past due in making monthly payments on a credit agreement. Someone is considered as 'in arrear' from the day that their first scheduled instalment is missed. The term is most frequently used when referring to over due payment of rent, mortgage, personal loans or credit cards plus child support and tax payments.

A 'CCJ' actually means County Court Judgement. This denotes a legal judgement established in a County Court connected to someone who is presently in debt to another party (a person or company) or where they have violated the conditions of a credit contract. A County Court Judgement will set an affordable pay back timetable with the idea that the indebted person will eventually be able to cover what they have borrowed. CCJ's are registered on public record and will have an influence on the debtor's prospects of being granted further credit for as much as 72 months.

A default is meant to denote when you have neglected your borrowing arrangements. In the event you have neglected a payment on a mail orders, for instance, they could place a Notice of Default on to your credit record. This will have an adverse impact on your file down the road if you choose to take on further borrowing.

A credit record is actually a documented history of any credit you have been given within the past 6 years. It reveals how much money you have borrowed and whether you have missed any payments etc. A credit record gives opportunity for possible lenders to investigate your financial past so that they can choose whether to let you borrow from them. The facts and figures on your record is put together by credit reference agencies for instance, Experian and Equifax. They use data from public documents (e.g. the electoral roll, court judgments etc) and from loan providers as well as financial institutions: e.g. credit accounts, credit applications.

First of all, get an up-to-date copy of your credit file to see if there are any inaccuracies on it such as a satisfied County Court Judgment (CCJ) that is still showing as unsatisfied or debt that is still showing as outstanding. You can get a copy of your report from one of the credit referencing agencies such as Equifax, Experian or CallCredit PLC for around ?2.

If you do see any errors or inaccuracies, these should be notified to the relevant lender in writing.

Check that you don't have any financial associations or financial connections on your file that aren't relevant. For example, if someone you have lived with previously - or even someone who was at your address before you - is shown as still being there on your report, this could affect your credit rating.

Make sure that you are on the Electoral Roll - especially if you have recently moved. This can seriously affect your chances of getting credit if you are not showing on there.

At all costs, avoid companies who say that they repair your credit! Any changes that need to be made to your credit file can be instigated by you. You do not need to pay a third party to do it on your behalf.

Keep checking your credit report regularly - this way you can keep an eye on it.

If an application is refused, do not make repeated applications again or elsewhere. Find out why you were declined and take steps to put it right. Lots of declined applications on your file will make the situation worse.

Finally, when making an application, always fill in the correct details each time, especially moving home dates. Failure to do - or even a slip of the pen - could see you being refused credit.

Debt, Loans & Business Cashflow
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