Credit Crunch

08 October 2007

(Please note, the following news and comment material is for general information only and does not constitute investment, tax, legal or other form of advice.)

What Does the recent Credit Crunch mean for Borrowers?
The recent Northern Rock Bank episode coupled with the Governments bungling of the whole affair could mean worrying times ahead for some borrowers who may be looking to remortgage or take out a secured loan.

Why?
Before the credit crunch, lenders were effectively falling over themselves to lend money and willing to take calculated risks over those applicants who were perceived rightly or wrongly a poor credit risk. Some lenders were even allowing those with small incomes to borrow 4 and 5 times their salaries. Whilst many in the industry will doubt this wisdom of this policy in the first place, there is concern that the level of debt accumulated over the last 10 years by ordinary men and women is now officially out of control.

For those potential applicants who looking to borrow money and who possibly have a bad credit history, it is always advisable to seek independent financial advice. In addition, consider finding out your credit history before embarking on any application process. Remember, each time you apply for a loan, credit card or mortgage, a marker is placed on your credit history file. Some lenders will use this information as part of their risk assessments when deciding whether to lend or not. Lastly, but not least, shop around for the best deal and consider those lenders who perhaps specialise in what you are looking for or who maybe sympathetic to your financial circumstances.

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