Monday, May 14, 2007

Mind Your Credit History

Many borrowers do not prefer to give security to the lenders. In such cases, the lenders rely on borrower's credit history, monthly income and repayment capability.

Mostly, the personal loans do not involve any security. They are taken as unsecured loans and, therefore, you need not provide any security. Tenants and homeowners – both are eligible for such type of loans.

You can take out personal loans for many reasons. Purchasing a car, improving your home, consolidating your debts and going on holidays are some of the common instances where a borrower can rely on these types of loans. The loan amount is flexible as it ranges from £500 to £25,000 in case of unsecured personal loans. If you can provide a security to the lender, the loan amount can be further extended.

Personal loans are given to you for your personal consumption. You can use them in any way you deem fit. The maximum loan amount that you can get depends on several things like your credit history, monthly income and DTI (debt to income) ratio. The DTI ratio highlights your disposable income. In case of unsecured personal loans where no security is involved, your DTI ratio assumes a greater significance. A less than 20 per cent DTI is considered good.

Credit history reflects upon your previous experiences in dealing with the lenders. If you have been regular and punctual in repaying the instalments to your previous lenders, it means that prospective lenders can rely on you. A good credit history is always a positive aspect in your repertoire.

Personal loans are very popular in the UK financial market. By 2011, the personal loan market in UK is likely to grow further by 19 per cent. The banks and online private lenders will play a significant role. The online loan market is already well developed and a lot of lenders are offering different financial products to suit the varying needs of the borrowers.


Raj said...

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Erik said...

Your individual credit history determines your credit score which is a number assigned by a scoring agency through Experian, Transunion and Equifax. The score is a number which is a measure of your past credit history. The number of credit accounts you hold; your potential for borrowing; even the number of the inquiries to the Credit Reporting Agencies are all factors in your credit score.
The actual official definition of what constitutes a sub-prime borrower, is at least as it pertains to banks and how much capital they need to hold to off set the risk of holding the loan as well as their portfolio of loans.
Banking regulators consider you to be a sub-prime borrower if you have a FICO score of 660 or lower; two (or more) 30 day delinquencies in the past 12 months, or one 60 day delinquency in the past 24 months; a foreclosure or charge-off in the past 24 months; any bankruptcy in the last 60 months; qualifying debt-to-income ratios of 50%s or higher; and, "limited ability to cover family living expenses each month". Always remember that these definitions apply specifically to banks and thrifts which hold these loans in portfolio, and that these lenders make up only a small portion of the sub-prime market today.
Lastly, only the lender can be the one who can judge your credit based on there underwriting guidelines that most companies have to follow on a daily basis, to stay in compliance. If you miss a credit card payment or two, that doesn't automatically mean that you are stuck into paying in the double-digit interest rates. The only way to know where you stand, is to talk to one of our members by filling out one of our forms.
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