How to score with creditWritten by Richard Green
With a massive £1.3 trillion of personal debt in UK, obtaining credit and staying financially afloat are daily dilemmas for British consumer. Many major banks, including Lloyds TSB, have recently declared an increase in number of customers experiencing repayment difficulties, with need for better financial advice and support has never been more important. Shadow Chancellor Oliver Letwin said that current levels of personal debt comprise a “time bomb” that poses a threat to as many as 15 million households. To help consumers make informed decisions when taking out personal finance products such as credit cards, loans and insurance, a new breed of financial comparison websites has emerged. Since 1997, consumer websites like Moneynet (http://www.moneynet.co.uk/ ), Moneyfacts (www.moneyfacts.co.uk/), and Moneyextra (www.moneyextra.com/) have provided invaluable information to help choose best financial products. However, what happens when things go wrong and payments cannot be met? The unfortunate borrower gets branded with a bad credit rating and any further loan applications may be turned down, or lenders may charge higher rates of interest if there is a higher risk in default of a loan. To someone already in financial difficulties, increased rates will of course make a bad situation worse. Each lender weighs information contained in a person’s credit file differently. However universal contributing factors include: * Electoral Roll information for a person’s currently registered address. * Payment history for mortgage, credit cards, loans, hire purchase and finance agreements. * Any County Court Judgments. * The complete amount owed and number of credit facilities used. * The number of new credit facilities that have been applied for (both successful and unsuccessful applications). * The type of credit used. * Salary details given on application form.
| | Alliance turning towards the financial dark sideWritten by Richard Green
Following in footsteps of many of its high street competitors, Alliance and Leicester has announced that it will no longer accept new customers onto its Online Saver and Direct ISA accounts. The interest rate for Online Savers account is also being cut from 5.35% to a straight 5%.Richard Brown of financial comparison website Moneynet ( http://www.moneynet.co.uk ) believes that Alliance and Leicester (A&L), in common with its high street competitors, has seen its costs rise as a result of recent rule changes covering things like way mortgages and general insurance are policed. He added, “Unfortunately it’s consumer who shoulders much of this additional burden” It seems to many of their loyal customers that A&L is indeed determined to make their customers pay in an effort to purge costs and boost their profits. These cuts are only latest of a series of changes that A&L have made during recent months. First to go was cashback scheme on their Moneyback credit card. The Moneyfacts (http://www.moneyfacts.co.uk) financial data website pointed out in February, that A&L had increased APR on their credit cards for all purchases up to 16.9%; as well as increasing penalty fees, and introducing punitive new clauses to current accounts. Other charges have been introduced to their mortgage products, balance transfer fees on credit cards, reductions in children’s savings accounts, whilst The Guardian (http://money.guardian.co.uk/saving/banks/story/0,12410,1509094,00.html) has revealed some suspect changes that have been implemented to their systems to increase number of customers who breach their overdraft agreements, triggering penalty charges. A&L has said that there is no hidden agenda, and that it still leads way compared with its banking rivals. A&L however, are not only financial group to be feeling pinch. Barclays, HBOS and Royal Bank of Scotland have all warned about credit arrears. An announcement concerning job losses at Scottish Widows, came alongside admissions from their owners LLOYDS TSB that there was, “An increase in number of customers experiencing repayment difficulties” with their credit card debts and unsecured personal loans. According to Lloyds' Chief Executive, Eric Daniels, we are currently experiencing, "a slowing consumer environment".
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