How do Credit Reference Agencies work?

Credit reference agencies, such as Experian, have come to play a significant role in most people s lives. We tend to interact with them at the point of applying for credit, whether that’s a mortgage or personal loans. However, while most of us have had some interaction with credit reference agencies at some point there is still quite a lot of misunderstanding about how they actually work. Why do credit reference agencies exist? According to the World Bank “credit reporting…allows lenders to evaluate the borrowing capacity of clients. And lets good borrowers benefit from more and cheaper lending.” Today, credit reference agencies have two main purposes: to help lenders make decisions that are fair, consistent and well informed and also to help prevent financial fraud. There are three agencies in the UK: Callcredit, Equifax and Experian. Who uses credit reference agencies? Banks, other lenders, building societies, mobile phone companies and retailers are some of the main organis
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How will the proposed energy price cap work?

Energy prices are a touchy subject for many of us. British Gas, for example, announced in August that it was increasing its prices by 12.5% from this autumn. For typical households on a dual fuel tariff that’s an increase of around £75 a year. It seems that there is a never-ending stream of bad news about energy prices with the big six following in each other’s footsteps and repeatedly giving consumers bigger bills to swallow. So, when it was announced that the government was considering an energy price cap, there were sighs of relief right across the country. But what does the new energy price cap actually mean for British consumers and are you likely to benefit? What is the energy price cap? It will mean that around 18 million people in the UK will see their bills reduced by roughly £120 a year. Those who are affected are consumers who have not ever switched i.e. the most loyal customers. It’s these people who have been with a supplier so long that they have ended up on the
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How does the state pension work and what is the ‘triple lock’?

The state pension has changed radically since it was first introduced in 1909. It has had to – a century ago, just 500,000 people over the age of 70 were in receipt of the state pension which was, at the time, five shillings (25p) a week and was paid in full to individuals aged 70 or more with an annual income of £21 a year or less reducing to nothing for those making more than £31 a year. Today, there are an estimated 12 million people in the UK of pension age or above. That represents 32 per cent of the working population. Government figures estimate that by 2050 that number will have risen to 17 million people or 36 per cent of the working population. That means that the state pension is becoming progressively  less affordable and successive governments have been forced to make changes. How has the state pension changed? The entitlements for the state pension changed substantially in April 2016 for men who were born on or after April 6, 1951 and women born on or after April 6
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How would a debt “breathing space” work?

There has been much talk in the media about how debt and repayments differ in the way that they are handled between Scotland and the rest of the United Kingdom. In Scotland, debtors are legally protected when they get into difficulty and enter into debt payment programmes. In these, a court assesses what a debtor can afford to repay over an agreed timescale and then freezes interest, penalties and other administration charges. There are also restrictions on the way that creditors can contact customers who are in this position. In England and Wales, however, there is nothing in law to stop a creditor from refusing to give a debtor breathing space, meaning that interest charges and penalties can continue to rack up, potentially putting the customer into very severe financial difficulties. The lack of rules over debt breathing spaces has led many people to claim that the situation harms both customers and financial organisations because it means that those who are in debt do not have any
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A guide to Secured Loans and how they work

Secured loans are becoming increasingly popular, particularly among those who own their own home and want to borrow a more substantial sum but may be struggling with an impaired credit rating. A secured loan is exactly as it sounds: you borrow money and the loan is secured against your property so you have to be a homeowner. In a bad credit situation secured loans generally come with lower interest rates than with sub-prime unsecured loans. That’s because the lender is exposing itself to less risk it has the value of the home to fall back on in extreme circumstances. But this also means that tenants, people in social housing and many others in shared-ownership schemes are not eligible for secured loans. Don’t confuse a mortgage with a secured loan: the former is known as a ‘first charge’ while the latter is a ‘second charge’ and this difference becomes relevant if the borrower become unable to repay the loans (see below). What Secured Loans are available? Secured loans ar
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How to get an income as a housewife

If you are a housewife (or househusband) and you don’t work or haven’t been in a job for a significant amount of time, then there may be a raft of benefits and state help that you aren’t claiming which can help you be relatively financially independent while your partner brings in the household’s main income. So, what benefits are available to the person who stays at home to look after the family or to keep the household running smoothly? Universal Credit Introduced in 2013, Universal Credit replaced six means-tested benefits and tax credits in one go. Those were income-based Jobseeker s Allowance, Housing Benefit, Working Tax Credit, Child Tax Credit, income-based Employment and Support Allowance and Income Support. While Universal Credit is only available to married or cohabiting people or those with children in selected areas, it is available to single people across the country. The credit available to those with partners or children is being rolled out across the rest o
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What sort of Personal Loan would work for you?

There’s never been a better time to borrow money ongoing record low interest rates and an increasing number of lenders on the market mean that even if you have a poor credit rating, taking out a loan need not mean that you break the monthly budget (lenders will scrutinise affordability). You might be planning a great holiday in 2017, want to replace your car, consolidate some other debts or make home improvements. So, what should you be looking out for when it comes to choosing a personal loan? Interest rates No matter what your personal circumstances, the rates being offered on a raft of personal loans have never been lower. If you have a good credit rating, then there are some particularly good deals out there at the moment. For instance, Sainsbury s Bank has a representative APR of 3 per cent on loans of between £7,500 and £15,000 but your repayment term is limited to between one and three years. Also, only Nectar card holders are able to apply for this loan. Those who don’t
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