Monthly Archives: March 2017

Understanding why you were refused credit

The monthly financesIt can be a real pain when you make an unsuccessful credit application, especially when you can’t see why you were refused.

“But I’ve got a good credit score!”, “But I pay all my bills on time!”, “But I don’t even have a credit card!”, people may say.

When you apply for a credit card, a loan or even a mobile phone contract, it’s up to the lender to decide whether or not to lend to you – and they have varying methods to work out if you’re a risk worth taking.

New research from Experian* has found that 86% of Brits think that lenders should share information on the reasons why they have been refused credit.  If you’ve been turned down, only the lender can tell you why because only they know. If you ask, they should be able to give you the main reason.

Does being refused credit affect your credit score?

Experian’s research also found that 75% of the population think that being refused credit affects your credit score.

Being refused for credit is not, in itself, hazardous for your credit score. While your credit report will show that you applied for a credit card – it stays on for a year –  it won’t actually show whether or not you were accepted.

However, credit refusal can often lead to more attempts to get credit – and making a lot of applications in a short space of time could have a serious impact on your credit score, and your ability to get credit in the future.

That’s one reason why Experian have partnered with Credit Strategy for 2017 Credit Awareness Week, in which the aim is to empower people to improve their financial future.

Some common reasons to be refused credit:

  • You’ve missed or made late credit payments recently, which show up on your credit report
  • You’ve had a default or a CCJ in the past six years, which will show up on your credit report
  • You’ve made too many credit applications in a short space of time in the past six months
  • There are mistakes such as incorrect addresses or other errors on your application form
  • You may not fall into the target bracket for the type of credit you’ve applied for

Understanding the impact of your credit report

Did you know that 61% of homeowners have never checked their credit report? Your credit report is a summary of credit accounts you’ve had in the past six years – and that can include not only credit cards, loans and mortgages but also overdrafts, mobile phone contracts and certain utilities such as gas, electricity and water.

Lenders use it to take note of your repayment records and how well you’re coping with your finances, and use it, along with the info on your application form and info they might already have if you’re an existing customer, to help them make their lending decision.

In our survey, only 56% identified the lender as the one who makes the final decision for a credit card, with loan (61%) and mortgage (67%) not far ahead.

Interestingly, 76% said they would like to see more information on what they can do in the future to ensure they don’t get refused credit again.  Understanding how your credit report works could help you understand the reasons why you may have been refused credit – and help you manage your finances better in the future.

Understanding your credit score

We also found that the young don’t check their credit score. 85% of Brits aged 18-24 don’t know what their current credit score is, and almost three-quarters (73%) have never checked their credit score.

Your Experian Credit Score tells you how lenders may view you, which is useful when you apply for credit – and is FREE FOREVER. The higher your credit score, the more chance of being accepted for credit, at the best rates.

* Conducted by YouGov on behalf of CFA, 10th – 13th March 2017

Identity Fraud hits record levels

To help you spot ID Fraud, we now offer Identity Fraud Monitoring for FREEAnyone can be a victim of identity fraud, whatever your age and status – and as identity fraud reached record levels in 2016, the young are the highest-growing target.

New statistics from fraud prevention organisation CIFAS has found that the overall number of recorded cases of Identity Fraud in the UK in 2016 were almost 173,000, an all-time high level and a 59% increase on the figures just three years earlier.

What’s more, almost 25,000 victims of fraud were aged under 30, and the number of under-21s affected was up by a third.

Did you know that almost nine out of ten (88%) identity frauds are now committed online? With so much personal data on the internet, we are all potentially vulnerable to hacking or phishing.  Your full name, date of birth, current address and national insurance number, and the passwords and PINs to your bank accounts are among the things fraudsters are hoping to get hold of.

Find out more about how Experian can help protect you from Identity Fraud here

Once identity fraudsters have enough of your personal details, they can apply for credit in your name and run up debts without you knowing. In fact, you’re 17 times more likely to suffer a case of fraud than a robbery.*

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Budget 2017 – how will it affect you?

Chancellor Philip Hammond has just announced the final Spring Budget, and in it we saw investment in education (some controversial), money allocated towards the crisis in social care, increased NI on the self-employed and much more.

What you said
budget-twitter-poll-2017-400On Monday 6th March we asked our Twitter users to decide which of our choices they thought were the most important factors in the Budget – almost half our 4,265 respondents (47%) said social care, NHS and benefits were, with 25% saying national living wage and 22% income tax rates.

Among the most popular topics mentioned in ‘other’ were the state pension, defence and clamping down on tax havens, while by and large people accepted that tax rises would be needed as long as they could be ring-fenced for NHS and social care. Anyway, here’s a summary of what he said….

Personal taxes

  • The national living wage will rise to £7.50 per hour in April.
  • Personal allowance (how much you can earn in a year before being taxed) will rise to £11,500 – the seventh consecutive annual rise, with a rise to £12,500 the target by 2020.
  • Higher tax rate threshold will rise too from £43,000 to £45,000 (except in Scotland), with the aim being to reach £50,000 by 2020.
  • However, there is more tax on the self-employed – an extra £145m to be raised by 2021-22
  • National Insurance rises for the self-employed: class 4 NICs will increase to 10% in 2018, with a further 1% increase in 2019. Some experts say this goes contrary to the Government’s 2015 manifesto.  

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Buying a new car? 5 key finance tips

Girl in new carLooking for a new car? Whether you’ve gone for a brand new model or a second-hand purchase, you may need to pay for it in stages with a loan or hire purchase. 

With these types of finance, a good credit rating can be the difference between getting a good interest rate or not, or sometimes getting any deal at all.

How much did you spend on your first car?

Many of us will have handed over a few hundred pounds at most just to get our young hands on a car of our own, even if it had seen better days.  Well, things have changed these days, with a generation gap when it comes to car-buying habits.  One in five 18-24 year olds, rather than buying a used and fairly old car, now chooses to lease their car. This is more than double any other age group, with just 5% of 41-45 year olds, and 6% of 46-50 year olds choosing this type of credit.* Continue reading

Car finance: how to get the deals you want

Making memoriesDid you know that new car registrations are on the up? They were higher than ever in 2016, with over 2.6 million cars registered throughout the year.

And from 1 March, all new cars for the next six months now have the new 17 number plate. However, the forecast is not all rosy. The chief executive of the SMMT (Society of Motor Manufacturers & Traders), Mike Hawes, said on 5 January that he thought this may have been a peak, and that 2017 would see a 5% decline due to the weak pound and the effects of Brexit.

Car finance is one of the most common examples of how we pay for ‘large ticket’ items, and a good credit rating can be the difference between getting a good interest rate or not, or sometimes getting any deal at all.

What are your car finance options?

If you decide to borrow credit to buy a car, the marketplace is vast, with plenty of rate and payment options. It’s worth comparing different loans and methods of finance so you get the one that’s best suited to your needs.