"If people who have lived at your address before have had debt problems, this can affect your credit score.
MYTH: Although your current and previous addresses (usually going back five years) will be noted on your credit file, it should only contain details of your own credit agreements. Similarly, if you share an address with a flatmate, or family, their financial arrangements should not affect your credit score unless you linked financially – ie have a mortgage, credit card, or bank account with them.
Checking your credit file can harm your credit rating
MYTH: Apparently almost one in two people believe that checking their file will leave a "footprint" that can affect their credit rating. This is not the case – people can check as often as they like, and request reports from more than one agency. This information is not recorded or held.
Being registered to vote improves your credit score
TRUE: Lenders are extremely reluctant to lend to those whose name does not appear on the electoral roll. Being registered to vote at your current address will bolster your credit rating.
Being late with just one bill won't affect your credit score
MYTH: Paying any credit arrangement late – be it your mortgage, credit card bill, or mobile phone bill – will be recorded on your credit file, and is likely to have a detrimental effect on your rating. Since the credit crunch lenders have become far more cautious about who they will grant credit too, and even small infrequent misdemeanours could mean you will not be offered the keenest rate. Make a habit of this and future credit applications are likely to be rejected flat.
Your file won't show that you were turned down for credit
TRUE: Nine in 10 consumers think being rejected for a loan or credit card will adversely affect their credit rating. The truth is that this fact will not even be recorded on your credit file. However, ALL applications for credit will be recorded, and if there are numerous applications within a short space of time this can send alarm bells ringing – regardless of whether the credit has been granted or not.
It's only what I spend on my credit card that counts
MYTH: Credit files will keep a record of you credit limit – so if you have a £10,000 limit on your card this is what a lender will look at, even if you only spend and then repay £250 a month. This applies to all credit cards, bank accounts and loans. If the total available credit looks to large, compared to you income this will have a detrimental effect on your score. To rectify this problem close any old credit agreements. People often cut up their plastic but don't inform their provider they have a new credit card, so this credit line still sits on their file. Likewise if you have a large overdraft facility you never use you may want to reduce it"
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( 2.9 / 652 )If you have ever had a credit card then you will know just how high the interest can be on repayments that you make. News today is that research is showing that credit card companies are waiving balance transfer fees but charging higher interest rates.
"The number of credit card providers offering people the chance to transfer outstanding debt from another card without having to pay a fee to do so has risen by nearly 20pc during the past year to 69, according to financial website MoneyExpert.com.
But the average interest rate charged on the balance that is shifted over is 7.03pc for cards that do not charge a transfer fee, compared with 4.26pc for those that do charge one.
Although there are some providers, such as Northern Bank, that do not charge a fee but still offer 0pc deals for a limited time, others charge as much as 15.9pc in interest on the money transferred.
Credit card providers have been steadily raising their transfer fees for 0pc deals during the past few years, with people now typically having to pay 2.4pc of the amount they are transferring to take advantage of a 0pc interest deal.
The number of cards offering 0pc interest on balance transfers has also fallen, dropping from 171 to 149 during the past 12 months, while there has been a 25pc drop in the number of providers offering 0pc interest deals for more than 12 months.
Pierre Williams, head of research at MoneyExpert.com, said: "Card companies were battling over the longest length of balance transfer deal, and transfer fees crept up. Now they are cutting back on extensive 0pc deals and instead looking to offer fee-free transfers.
"Clearly an increase in cards offering balance transfers without fees is good news for consumers, but we're also seeing the lengths of introductory deals decreasing.
"The number of cards with 0pc deals lasting more than 12 months has fallen significantly in the last year so card users will have to consider whether they can clear their balance in the allotted period."
The company said people considering transferring a credit card balance to a new card needed to work out if they would be better off paying a fee for a longer 0pc interest deal, having a shorter introductory offer or paying a higher interest rate but not paying a fee"
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( 3 / 598 )If you have ever tried to take out a small loan but been refused then you may have wondered what the reason for this is. You may be suprised to know that those who have borrowed money before, even on just a credit card have acquired a credit rating and this is the key to getting your loan applications accepted.
"Borrowers not only face higher rates, but the number of personal loans available is dwindling. There are currently 36 personal loans available to consumers, uSwitch.com claims, compared to 57 loans this time last year – a drop of 37pc.
According to Moneyfacts.co.uk, the cheapest loan for someone wanting to borrow £5,000 over three years is from YourPersonalLoan.co.uk at an APR of 8pc. Tesco Personal Finance, Sainsbury's Finance and Alliance & Leicester also offer competitive deals at 8.9pc, 8.7pc and 8.9pc respectively, although the exact rate will depend on your credit rating.
The best rates will only be offered to those whose financial behaviour shows they are unlikely to default on their debts. Everyone has a credit rating, which is basically an assessment of how likely we are to miss payments on a loan or other credit arrangement. So, if you have been late making loan payments, this will have a negative impact on your credit history and will mean lenders may be reluctant to let you borrow from them.
Lenders will also look at the number of credit searches carried out on you in recent months, as well as the length of time you have been with your bank. According to credit reference agency Equifax, they may also focus on how long you have lived at your property and the length of time you have been with your current employer.
To find out if there are any black marks on your credit history, you need to take a look at your credit report. Under the Consumer Credit Act, you can write to one of the credit reference agencies, such as Experian or Equifax, and ask to see your file for a cost of £2. Alternatively, if you need to see your report in a hurry, you can check your file online.
Credit Expert from Experian offers a free 30-day trial, which enables you to see your credit report, and then charges £6.99 a month for continued access. Equifax's Credit Watch Gold service also offers a 30-day free trial and charges £69.99 for the rest of the year, but these can be cancelled once you have seen your report.
You can improve your credit history in several ways. Make sure you are registered on the electoral roll and, if possible, make more than the minimum payment on credit agreements every month. You should also always close any old credit card accounts, even if they show a zero balance, as lenders will take these into consideration when working out how much credit to give you.
Be wary of making lots of applications for loans, too, as these will show up on your credit record. Certain websites have online tools available to help ensure you don't end up applying for deals that you won't be eligible for. Moneysupermarket.com, for example, has a SmartSearch tool, which, after you have entered a few basic details, will point you towards the loans you are more likely to qualify for based on your credit history.
A spokesman for Moneysupermarket.com said: "With lending criteria becoming more and more stringent, it's important to keep your credit record as clean as possible and not taint it with failed applications for loans."
If it is a credit card rather than a personal loan you are after, then Confused.com has a tool which enables customers to see how likely they are to be accepted for the cards offered on its site. Again, this leaves no credit footprint.
Finally, avoid companies that promise they will repair your credit record in return for a fee. You may end up paying out a large sum of money only to see no real improvement"
If you would like to know more on this topic then why not have a look at our section on credit ratings.
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( 3 / 545 )We all know that British banks have a bad reputation but new reports show that they are now amongst the most expensive in Europe.
"It is a fresh blow to British banks which have been accused of taking billions of pounds of taxpayers support which they kept hold of to repair their balance sheets rather than passing onto customers through better rates on mortgage and savings deals.
The study carried out for the European Commission criticised Europe’s banks for their complex price structures and poor service.
It said British banks charge an average of £93 a year for running a current account, seventh most expensive out of a list of the 27 European countries. The most expensive is Italy, charging £229, and the least expensive is Bulgaria, charging £24 a year.
While customers at British banks can access free current accounts, there are options that allow them to pay a monthly fee in return for current account packaged with other benefits such as insurance. The charges that banks apply to overdrafts also vary widely.
The Commission said “opaque” fee structures were inhibiting bank customers from taking up their right to switch banks.
Only 9 per cent of European consumers switched current accounts in the past two years because confusing information about current accounts makes it impossible to compare different offers among banks.
Europe’s Consumer Commissioner Meglena Kuneva Retail bankers are letting consumers down.
She said: “There is widespread evidence that basic consumer principles are being violated with problems from complex pricing to hidden charges and information that is unclear and incomplete.”
Banks’ borrowing costs edged towards the same level as the Bank of England interest rate yesterday, the first time since before the credit crisis as the profits lenders make on mortgages continues to grow.
The rate at which banks lend to one another, known as the London InterBank Offered Rate, dropped further this week, reaching 0.57. It has fallen gradually from double that amount at the beginning of July.
At the same time, the Bank of England has kept interest rates on hold at 0.5 per cent and experts suggested Libor is just days away from falling to the same level.
But while lenders are enjoying a low cost in wholesale borrowing, banks are refusing to pass on the savings to borrowers, with customers paying an average of 3.8 per cent on a two year tracker.
Also, British high street banks also topped a list of lenders offering the worst customer service.
Halifax, Northern Rock and Abbey were named as providing customers with the least satisfaction. Barclays and Royal Bank of Scotland also provided also performed badly in the list compiled by consumer group Which?
Smaller lenders, including First Direct, Coventry Building Society and Britannia Building Society, triumphed with the highest scores, with customers praising the lenders for keeping them informed and for the overall cost of their deals.
Halifax was the worst performer with a satisfaction rating of 45 per cent while First Direct was the best obtaining a score of 91 per cent. The average score was 62 per cent, up from 58 per cent a year ago.
Michael Coogan, director general at the Council of remortgage Lenders, said: “It is good news that consumers are increasingly satisfied with their lenders. Lenders have been working hard, under very challenging market conditions, to communicate effectively with their borrowers and treat them fairly. These efforts are bearing fruit, as this survey reinforces.”
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( 3 / 523 )There has been much talk recently that the recession could be nearing an end as the housing market picks up. However reports that the level of unemployment is declining seem to be untrue and infact recent figures show that those unemployed in Britain has hit a high of almost 2.5 million.
"It's a conundrum: central bank chiefs such as the Bank of England's Mervyn King and the US Federal Reserve's Ben Bernanke say the recession is over, yet unemployment on both sides of the Atlantic continues to rise rapidly, with Britain's jobless rate hitting a 13-year high of almost 2.5 million last week.
So what is going on? We have no proof yet that recession – commonly defined as two consecutive quarters of contraction in the economy – is over, although all the signs are that many major economies will return to growth in this quarter. In Britain's case, that will end a run of five quarters of shrinkage.
But, as King made clear last week, that is far from the end of the story – it certainly isn't time to plan a party, except possibly in some banks where the bonuses are flowing again.
The key thing to remember is that in this recession Britain has seen its total output of goods and services slump by more than 5%. So just because we may grow by, say, 0.4% in the July to September period, it doesn't mean normality has returned. It will take many quarters of that kind of growth to make up for all the lost output, hence it will be a long time before joblessness stops rising, let alone begins to fall.
There were, however, encouraging signs in last week's labour market data. The number of new redundancies each month has levelled out and the number of job vacancies has stopped falling although unemployment is likely to top 3 million next year.
So if the recession is over, what's to worry about? Plenty, and King was right last week when he said the pace of any recovery was "highly uncertain". His Bank monetary policy committee colleague David Miles said on Friday: "This is going to be a protracted period of a return to a more normal level of activity." He believes we may remain in recession for another six to nine months.
The latest lending trends report from Threadneedle Street, published last Friday, also made for alarming reading. It showed a record fall in bank lending to British firms in July. In spite of the taxpayer bailouts, banks are not keeping to their word that they would support a recovery. There have been huge efforts by the government and Bank of England to get banks lending again, but it simply isn't happening – making a sustainable economic recovery almost impossible.
Retail sales figures last week were also very subdued, suggesting people remain cautious about spending if they are worried about losing their jobs. Even those in secure jobs are preferring to pay off their debts. All these factors can weigh on the economy for several years, especially if whichever party wins the next election tightens fiscal policy too much and too quickly, as the Tories look likely to do. This is where the danger of a so-called double-dip recession comes from."
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