With a recent survey importance how money worries are having a negative impact on the health and love lives of Britons, there has never been a better time for people to reassess the way they manage their finances. Indeed, the study, conducted by GE Money Home Lending on behalf of moneybasics.co.uk, even suggests that this message has already started to hit home. It found 17.4 million people with outstanding unsecured loans,
credit card debt and overdrawn bank accounts intend to reduce their borrowing by the end of the year. And, with statistics released by Credit Action in February showing interest repayments on personal debt reached 66bn in the preceding 12 months, it appears searching for the best
personal loan product is as good a place as any to start.
How should people go about looking for the best personal loan?
According to a report in the Independent, consumers should not rush into
applying for a personal loan. Instead, they should wait until they have checked their credit report. "Seeing your credit report will also help you to assess more clearly the kinds of loan for which you are likely to qualify," the publication advised. Personal loan providers use credit reports, which contain information on an individual consumer's past borrowing and repaying, to determine a customer's ability to repay a debt.
How important is credit history?
Just when many people are in need of a personal loan to keep themselves afloat, credit is now harder to come by. As a result, consumers need to take care to ensure that their credit scores are as high as possible in order to reduce the likelihood of a provider refusing them a personal loan product. Crucially, the way to do this is not to avoid taking out a large personal loan, but to demonstrate an ability to make payments on schedule. Other ways of improving a credit score are to register on the electoral roll and close any credit cards not being used.
Other things to consider
A report in the Times recently warned that "missing" credit history details could be harming people's chances of securing a personal loan. Specifically, details of mortgages, credit cards and bank accounts taken out or opened prior to 2000 are being omitted from these reports as credit agencies do not have access to the relevant data. "A lack of information on your credit file will affect a lender's decision," Neil Munroe of credit checking service Equifax confirmed in an interview with the news provider. "The more positive data you have on your file, the better the interest rate will be that you are offered or the more likely you are to be offered the deal." This emphasises the importance of regularly accessing credit reports to check for mistakes and contacting a bank or building society to ask for information to be shared if an error has been made. To help with this, a recent report from the Treasury Committee called on the Office of Fair Trading and the Information Commissioner's Office to investigate the fairness of credit searches. "Many consumers have no idea why they are rejected for a loan," commented John McFall MP. "That is why it is so important people should be able to afford to access their credit files and why correcting inaccurate data should be simple and easy." However, while things could get easier in the future, consumers should not be put off from checking their credit reports now to ensure they get the best possible deal.
