Banks protecting their interest only
It was not too long ago that banks were seemingly falling over themselves to offer new and current customers any amount of money!.
However, thanks to a combination of bad decisions and a failure to repay outstanding debts, banks and building societies are these days far more choosy about who they are prepared to lend to because they do not want bad debts to leave a significant dent in their profits.
How do they decide?
Decisions are based on the lenders wish-list of what makes a profitable customer and right at the top of this list is the applicant’s recent financial history.
The following article explores some of the factors which are taken into account when looking into the recent financial history of an applicant and offers advice on how to check it:
You are no longer a person – but a number!
The past decade has seen a complete shift in the attitude regarding lending and mainstream lenders now focus entirely on ‘rating for risk’.
This means that every bank and building society will use your individual rating to not only dictate whether they will accept your application but also to decide which APR (Annual Percentage Rating) they are prepared to offer.
This is confirmed by Martin Lewis at MoneySavingExpert.com who states that:
So lets look at your rating
There can be no escape from your (financial) record. Your credit record contains accurate details regarding your financial history. Some of the details contained on your credit record include:
- Outstanding Debt
- CCJs (County Court Judgements)
- Missed Payments
All of which will serve as a red flag to potential lenders.
The good news is that its a changing landscape with new lenders on the block
Whilst banks and building societies are still extremely cautious about whom they will lend to, the landscape is beginning to change.
It is as much about ‘will you make the lender money’ as it is about risk. This is the attitude that has been adopted by an enterprising group of ‘specialist’ lenders who are changing the landscape of borrowing in the UK.
So what new options are there?
If you have received the cold shoulder from your bank, there are still options for you to borrow money. However, some are better than others.
Below we have identified 2 to check out and 1 to stay away from!