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Protect yourself from the credit crunch
Beware ads offering easy credit on social networking sites
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Easy credit ads are peppering the social networking sites, offering a quick advance to see you through until your wages hit your bank account.
Their target audiences are students, new graduates and young people in first jobs and the offers look tempting, with promises that a poor credit history, missed payments and multiple applications for credit won't matter. But click the link and you'll find annual percentage rates that can top 130 per cent.
Other offers include loans which advance money against the value of your car, and credit cards, all with the promise that you are unlikely to be refused.
The debt counselling charity Credit Action believes many of these easy credit ads are against UK credit advertising regulations and has complained to the Office of Fair Trading.
The Credit Action website holds no punches when expressing the charity's view of these campaigns: "The biggest bodge-up that most make, is accidentally forgetting to mention the APR: that couldn't be because their APR is so enormously high could it? Surely not!"
Instead of paying sky-high interest, and stretching your finances even more, it pays to focus on building up a good credit history that will help you to qualify for much less expensive credit.
These tips could help make you elligible for less expensive credit:
1. Learn to love your credit report
This is your personal credit history of what you've borrowed, your repayment record and other factors that lenders check when deciding whether to make you an offer and what interest to charge. It should be accurate and up to date, or you may miss out. Check your Experian credit report - it's free
2. Set the record straight
You might notice that a loan you repaid is logged as outstanding or see that a lender has registered that you applied for a loan when you only wanted information.
If you find anything like this, contact the credit reference agency that gave you access to your credit report and explain what really happened. You can also add an explanatory note if circumstances such as illness or an accident explain why you've had problems with repayments in the past.
3. Borrow sensibly
Lenders are looking to deal with people who have a good credit history where they can see that payments have been made on time in the past. Having a credit history can help in future applications you make.
If you have plenty of self-control, one option may be to take out a credit card and use it instead of cash for everyday spending, then repay everything you owe every month.
If you earn enough, you might also take out a loan that you can comfortably afford to repay. Both of these will give you a track record and add to your credit history. You should only ever borrow what you can afford to repay.
4. Always pay your bills on time
You may think it won't matter if you skip a few repayments on a card or loan, but it will. A missed repayment will be registered on your credit report for three years and may cause lenders to fear that you'll let them down, too.
5. Register to vote
Lenders look for stability. When you're starting out, you'll probably move home quite frequently and may not have a long employment history but you can register to vote at your current address - lenders use the electoral roll to check that you are who you say you are and live where you claim to live. Make sure that you're registered at the address you give on any application, or they may suspect fraud.
"Until you've established a decent credit history, you may find it hard to get credit or will have to pay high interest that reflects the lender's concern that you won't pay them what you owe, says Jim Hodgkins, managing director of CreditExpert.
To view your personal credit information that lenders are currently basing their credit decisions on, apply now for a free online credit report. Click here for a free 30-day trial and a free copy of your Experian credit report
Enter your details and start a free 30-day trial of CreditExpert's monitoring service. Privacy Policy
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