Tips to help you combat the credit crunch

2008 has not got off to the most promising of starts, with talk of utility bills to rise, the housing market is slowing down and where once credit was readily available, we are now finding lenders being more stringent with their lending conditions.
 
The following are tips/advice on how to help you combat the ‘credit crunch’.

Check your credit report

 Find out for yourself what any potential lenders will read about you, your financial situation, payment history etc. It is imperative this reads accurately to put you in with the best opportunity to be approved for whichever financial facility you require. It should list all credit accounts related to you such as loans, mortgages, credit/store cards. It could even list mobile phone contracts and will certainly declare if you have any county judgements against you for prior non-payments.

If there are any inaccuracies on your report, you should contact the relevant companies direct to correct this. Remember, even a small mistake could deter a potential lender from offering you a loan.

Ensure you are registered to vote at your current address. This simple thing can add valuable points to your credit score.

Don’t assume there will be interest rate cuts

While it was good news to hear of the recent 0.25%cut in the base rate, and a couple of others are predicted this year, this is by no means a hard and fast way to rely on solving your financial situations. Even with the latest reduction, not all lenders have passed on the reduction to their customers, and in a number of cases, some have even increased the rate for those who they consider ‘high risk’.

There is no such thing as ‘safe as houses’

The housing market is no longer as buoyant as it was previously and 2007 saw up to 400,000 people refused for mortgages, and a rise of 30% of homes repossessed in the first half of the year.

Anyone who has a special mortgage deal due to finish in 2008, should be prepared to pay a bit more than before, and budget accordingly in advance.

When it comes time to change your mortgage beware of high set-up fees which lenders have introduced to help them counteract some of the losses they have suffered of late. There have been reports on a website of a 46% rise in mortgages with an applicaton charge in excess of £1,000.

It is not all bad news, no, for those of you with some savings behind you, a good job and a good credit report, then this could be your year to buy the property you always wanted.

Face increased prices

It has been widely acknowledged that utility bills are set to hike their prices this year. In the first instance you can cut down a little by turning down your thermostats slightly, refrain from keeping appliances on standby and opt for showers rather than baths. Furthermore, despite prices rising, shop around and make sure you are with the best/most economical supplier. These are easy to research on a comparison website. You key in your information and it matches your needs to the best offers available.

Make your credit status better

Many people use credit to obtain something special they really want- be it a house, holiday, car. The trick is, once credit is obtained, that you handle it wisely.

The best way is to start with a good credit report. If you do tend to miss a payment here and there, then direct debit would combat this. If you have too many payment dates to remember, perhaps consider consolidating all your debts into 1 easy monthly payment (which may in fact save on interest over a period of time too).

Take care not to have too many credit cards on the go. Why not condense them into one and concentrate hard on clearing that. You would look much more appealing to a potential lender by choosing this option.

With all this in mind you should now be better armed to tackle the ‘credit crunch’ face on.