Disadvantages Of Secured Loans
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When you fill out an application for any kind of credit, whether it's a store card or credit card, a loan or a mortgage, for example, it will be necessary for you to undergo a credit check by the creditor that you are approaching for credit.
A credit check helps a financial organisation to investigate your financial history, past and present, including whether you pay off your debts on time, are late with payments, or have missed payments. A credit check also reveals other outstanding amounts and also any County Court Judgements (CCJ's) and other defaults.
This then offers the loan company a report of what type of financial risk you present if they choose to lend you money - and what chances they have of getting their money back! Of course, there is no one who desires to lend money to someone who doesn't make payments on time or not at all! This checking procedure is referred to as credit rating.
There are a few organisations who have this data about you - the two main ones are Experian and Equifax.
If you are in the process of considering applying for credit, get a copy of your credit file first. This will give you an opportunity to check that all the data in it is right and query anything that looks out of place. As an example, just a single item of distorted information - say your credit file shows an existing debt that has been paid - could sway the decision for being offered credit - or not.
In order to get a copy of your credit file you will need to approach one of the credit reference agencies. They will charge you a small amount (around £2) and you will be sent a copy for your perusal.
Confirm that your file records you on the electoral roll - if you are not there, this will have a damaging consequence for your credit rating. Also, financial 'associations' - where perhaps someone who is living with you or has lived at your address previously has a low credit rating - will influence the probability of getting any credit.
If you spot information that is wrong on your credit record, inform, in writing, the organisation who has presented wrong data regarding you, and forward a copy to the credit reference agency as well.
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