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Is the economic downturn really affecting credit availability?

Posted in 'Credit Crunch' by Barry Stamp

28 November 2011

  1. Consumers are still getting the credit they apply for with no problem. There’s no doubt that demand for credit remains subdued, but consumers are having no trouble geting the cheaper credit cards recommended by us when we match your credit score to lenders. In fact we have not received a single report that a recommended lender has not said yes to a lender recommended by us after using a credit report to match credit standing with lender appetite since 2008.


  2. We have seen some real changes in the mortgage market, including the requirement for higher deposits generally, the introduction of hefty arrangement fees and valuation fees, a dramatic reduction in the availability of fixed rates on offer, and the removal of easy-entry schemes for first-time buyers, shortly to be addressed by the recently announced First Buy scheme jointly funded by the Government and by housebuilders.


  3. Credit cards continue to have some of the best deals on offer that we have ever seen, with 0% balance transfer deals moving out from 6-12 months to the current offers of 15-22 months, and with 0% on purchases for a lesser period now becoming the norm rather than the exception.


  4. Payday Loans have rocketed in popularity, taking up some of the slack in the personal loan market and also reflecting the ease of arranging these short term loans compared with the traditional bank overdraft. it’s important that you take a good look at the cost of credit if you take out a Payday loan or maybe even think about social lending, another area of massive growth in the current economic downturn.


  5. You may well have credit cards in your wallet or purse that you obtained years ago when your credit score was lower, and as a consequence the interest rates on the cards held by most people are much higher than they need be. On average, our customers who use their credit cards and who do not pay off the balance in full can easily save £400 per annum in interest if they switch to cheaper credit cards matched to their current credit rating.


  6. If you have been bullied into adding payment protection insurance (or just agreed without thinking too much) to a loan, you should seriously consider either cancelling the insurance, or moving to a new lender. Payment protection insurance has been uncovered during the past few years as a very, very expensive and often mis-sold and unnecessary part of any credit deal. It can add 30% to the cost of repayments. Whether or not you agree to add payment protection insurance to a loan cannot, by law, affect the lender’s decision to extend credit to you.

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