Related Credit Card Article

"Get your credit while you can"

By admin | January 18th, 2008 | Featured

Taking out finance is never something that should be taken lightly or rushed into, as it can lead to spiralling levels of debt, as many consumers have found out over the years. However, in light of the current turmoil in the UK’s money markets, it has become increasingly important to take action quickly if you are certain that you need to take out finance, whether this is a credit card, a mortgage, a loan, or any other form of finance that comes through a mainstream lender.

In the summer of 2007 the global credit crunch that was sparked in the sub-prime sector of the United States’ mortgage market made its way across the Atlantic and wreaked havoc across the UK, as well as in other global destinations. The effects of the credit crunch quickly took a hold in the UK, affecting most financial sectors, and impacting on both businesses and private consumers. The credit crunch quickly left a number of casualties in its path – most notably Northern Rock, which suffered so much damage that it became the first victim of a run on a British bank in 150 years, and it could now end up passing into public ownership.

However, it is not just businesses that have suffered as a result of the credit crunch. Many lenders have had to review their lending strategies through fear of rising bad debts coupled with increased difficulties and costs relating to inter-bank lending. This has resulted in lenders right across the industry, from credit card providers to mortgage providers, tightening their belts when it comes to lending. As a result many people that may have faced little difficulty in getting finance a year ago may now find that they have very limited choice and will face increased difficulties when it comes to finding affordable finance.

Many lenders started to cut back on their lending in the latter part of 2007. There was a sharp increase in the number of credit card applications that were being rejected, a drop in the number of mortgage products available on the market from many lenders, and some lenders even stopped offering certain financial products such as personal loans. The bad news is that industry experts have predicted that the effects of the credit crunch are set to get worse over the course of this year, and this means that an increased number of lenders will become more cautious when it comes to lending money.

Those with an excellent credit history are unlikely to feel the effects of the cutbacks in lending, as lenders will still need to conduct business, and will therefore keep their doors open to good credit consumers. However, those with damaged credit, and in particular those with very bad credit, will find it more and more difficult to find a suitable lender to provide finance.

With lenders set to continue tightening their belts over the course of the year it is advisable for those looking to take out finance to start taking action early, before the choice of lenders and finance deals on the market becomes even more restricted. However, it is equally important that consumers do not rush into taking the first deal offered because they think that it is the only offer they will get – you should still compare different deals and make suitable choices.

Tags: credit crunch, finance

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