I have a fair credit rating is there any way I can get an unsecured loan of £10,00?

Asked by wilsonstrutte

1 Answer

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Answered by Richard Salter, IFA in Trowbridge, WILTSHIRE
This will depend both on what you mean by "Fair" credit rating and on your current affordability.
All lenders pass details of our credit worthiness into central databases so that whether we have a mortgage, unsecured loan, credit card, bank overdraft or other facility which could give us some form of credit (HP on a car) a record of how much debt and how well we have handled and repaid it is maintained. Credit facilities held, or simply applied for, (to detect multiple credit applications made at a similar time) are totalled up by value and your income then set against it. It might be that you are deemed able to afford say £20,000 of credit but have only taken up £10,000 of that 'allowance'. A fresh credit provider may see that you already have £20k of facilities so will not grant your further credit based on your current income, even though you have only taken up £10k of it.

Those who are late paying get marked down, those who miss a payment completely get black marks and those who breech credit limits - say you go £100 over a £5,000 credit card limit thanks to the addition of interest all get low scores. The best position to be is with a track record of acceptable levels of debt being regularly and reliably serviced and repaid.

Perversely those who avoid credit as some kind of 'spawn of the devil' will naturally have no credit record and are therefore very difficult for the credit industry to assess as to their repayments reliability. As a consequence they will get low credit scores just as much as bad credit payers do.

Your description 'fair' may simply be your way of saying you expect an average picture – typically going overdrawn a couple of times a year (Christmas and holidays being most common) and sometimes not clearing your credit balance completely every month (not a bad thing in credit terms so long as you are eating into debts, paying at least the minimum on time every month ( Do set up a direct debit to pay the minimum off each month) and so on.

If lenders see enough margin to lend based on your present credit history (bear in mind records for any given line of active credit you ever held are kept for up to six years after they were closed) and you have not had any IVAs or CCJs then they will go on to look at your affordability. If this is weak given your other commitments it can be boosted by applying with another person who also has a reasonable credit history and some spare affordability.

If you have both an acceptable credit history AND reasonable affordability (different lenders will take a different view on what they deem acceptable both as credit history and affordability) then a £10,000 unsecured loan should be no problem.

Note whilst you might feel you can afford to repay £10k over say three years, asking for the same amount but over five years can make it seem more affordable to a lender who could turn you down for the money over three years but allow you to take it over five years !! (5 years is typically the longest loan repayment term for unsecured money).

By the way current best buy loans are Nationwide's 6.3%- check out Martin Lewis's excellent Moneysavingexpert site for much more on creditworthiness and best buy credit deals.

Hope this helps
| 11.04.11 @ 15:23
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Answered by

Richard Salter
Richard Salter, IFA in Trowbridge, WILTSHIRE

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