Rebuilding bad credit

Rebuilding Bad Credit
The following general information may help you better understand how credit ratings and credit records are determined. It does not constitute financial advice and you can contact us directly for further information , help and advice on the process of how to rebuild bad credit.

How creditors determine to give or not to give credit

Lending companies and institutions use a number of different processes to decide whether or not to offer credit. If you have been told in the past you cannot have credit you can apply again, to the same company or a different one. It is important to understand that you have no right to be given credit and credit companies have no obligation to explain why credit has not been given (commonly known as having bad credit). However some companies may provide this information.

Bad Credit - Credit Scoring

Credit scoring works by awarding points for areas such as employment, wages, marital status and the area where you live. Credit is usually given if you score enough points. When applying for credit, it is a requirement for you to be told if this method is used. If your application for credit has been turned down, you can request the main reason for this and for the determination to be looked at again by the credit company. You should provide to the credit company any extra information which you think is relevant.

Credit reference agencies

A credit reference agency compiles information on your financial status from county court judgments and High Court judgements (known as court decrees and Debt Arrangement Schemes (DAS) in Scotland), bankruptcy details, the electoral roll and records of payments from previous agreements. If you have a financial connection to other persons living at the same address they may be included in the payment record. If other persons are included in the payment record this may affect the decisions on whether or not to grant credit to you. If your application for credit was denied due to information from credit reference agency records, you can request that the credit company let you know which credit reference agency was used. After finding this out you can then pay for a copy of the records from the credit agency. If you find something on your record which is incorrect or misleading, e.g. persons on your file with which you have no financial relationship, you can also request to be considered as a separate individual even if you have some financial relationship with another person or persons. You should always remember you have no right to be granted credit. The major credit reference agencies can be contacted as follows:

Equifax plc Credit File Advice Centre PO Box 1140 Bradford BD1 5USUK Tel: 0870 010 0583 Website: http://www.equifax.co.uk/

Experian Limited Consumer Credit Help Service PO Box 8000 Nottingham NG80 7WFUK Tel: 0870 241 6212 Website: http://www.experian.co.uk/

Call credit plc Consumer Credit Services team PO Box 491 Leeds LS3 1WZUK Tel: 0870 060 1414 Website: http://www.callcredit.co.uk/


For further information and advice call on 01202 254092

Prevent Home Repossession

The Royal Institute of Chartered Surveyors (RICS) has predicted that house prices will remain broadly unchanged in 2008. Despite this they believe that repossessions could rise from 30,000 to 45,000 a year. The Repossessions Advice Centre advise homeowners to act immediately to any repossession situation and explore the options available. Paul Fletcher, Director of the organisation said " There are options available, so its far better to address the situation before it happens, to really sit down and budget yourself for the next year."

Jerome Thompson from you-can-remortgage, explained " homeowners should go to lenders to explain the situation but there is little point in commiting to a payment plan unless they are sure that it is affordable. I do not advise burying your head in the sand, the problem wont go away but taking early advice and producing a budget plan for the next year before approaching the lender, could avoid a huge number of repossessions."

www.you-can-remortgage.co.uk

Sub prime lending

Most of us have noticed the media reportage of the US sub prime sector crisis. Following 17 interest rate rises since June 2004 defaults on mortgage payments have become common, especiallly in the "sub prime" sector where affordability limits were already stretched. Borrowers in this sector just do not normally have the resouces to fund interest rate rises. This has led to reduced income for sub prime lenders and because these lenders are funded by large investment banks, these are also affected. Hence the wobble on the stock markets.

So how does that affect us this side of the pond? The UK sub prime market has grown enormously over the last few years. From a starting point of just three or four specialist lenders there are now 31 sub prime lenders known to the author. Almost anyone has been able to obtain a mortgage despite poor credit histories or employment status, although this ususally means paying more for the privelage. Whilst the housing market has been booming and homeowners have seen large increases in equity, the sub prime market has been a sought after cash cow for lenders.

As the UK sub prime sector starts to look more like that in the US, lenders have started to react by increasing rates, usually by at least 0.5%. Other lenders are reducing the amount they are prepared to lend against the property valuation (LTV), or have reduced the amount of defaults or other credit problems that they are prepared to accept.

So will it still be possible to buy a property, or remortgage, in the future if you have a blip on your credit history? There will undoubtable continue to be lenders specialing in sub prime mortgages and remortgages but consumer choice is likely to be severely reduced in the future. It will be more important than ever to obtain advice from a broker who is truly independent and can access all of the lenders on the market.

Jerome Thompson Cert PFS http://www.you-can-remortgage.co.uk/

Mortgages not repaid in retirement

Mortgage debt averages £38,000 for pensioners with a mortgage. Scottish Widows research reveals that a fifth of pensioners have not repaid their mortgage by the time they retire.
Commenting on the figures Jerome Thompson from Reef stated " The average age of first time buyers is increasing. Considering the number of borrowers with endowment shortfalls and those on an interest only mortgage, it seems inevitable that the number of pensioners with outstanding mortgages will increase. It is essential that borrowers consider how they are going to repay their mortgage and should talk through their options with their broker."
www.you-can-remortgage.co.uk

House buying slows

According to July's survey from the Royal Institute of Chartered Surveyors, the number of new buyer enquiries is falling at its fastest rate for the last 3 years.
Meanwhile house prices rose for the 21 st month in a row. The survey also showed that confidence amongst Rics members in sales turned negative for the first time since March 2003 following buyers response to market conditions and a possible rate hike in autumn.
www.you-can-remortgage.co.uk

Advice from Mortgage Brokers Growing

According to research by Abbey, mortage advice from Brokers is growing in the first time buyer sector.
Samantha Cook from Wiseman Financial Management explained "We are seeing increasing numbers of first time buyers and those seeking a remortgage. It seems that buyers are realising that a good broker can source from across the market place and often obtain exclusive mortgage deals as well."
www.you-can-remortgage.co.uk

Mortgage exit charges -has the con been stopped?

The financial services regulator, the FSA, has announced that the majority of lenders have either scrapped or fixed their exit charges. The regulator took the view that recent increases in charges were unfair and illegal and gave the industry an ultimatum to rectify the situation or face the possibility of court action.

The city watchdog took action after lenders increased their fees, an example being Alliance and Leicester who raised fees from £195 to £295 in August 2005 , without explanation. An estimated 150,000 customers have been able to claim refunds of unfair charges over the last six months. The refunds are normally between £100 and £200 for every regulated mortgage. Most lenders now charge a fee that cannot be varied or have removed the fee altogether.

Sam Cook of Wiseman Financial Managment told Reef "I am pleased to see the regulator has acted to protect borrowers against unfair charges. The concern remains that lenders will simply recoup any lost income by putting up other charges".

http://www.you-can-remortgage.co.uk/