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Your Finances
Author:
Rightdrive Car Finance
Finance
How do i know whether i have good or bad credit?
There are three levels of credit scoring,- Prime (Good credit score)
- Near Prime (Average Credit score)
- Sub-Prime (Poor credit score)
So what is Prime and Sub-Prime?
- 'Prime' is a term used in the finance industry for someone who has a good credit history and that makes all their financial commitments on time.
- 'Sub-Prime' is the opposite and so is someone who is considered to have an adverse/Poor or Bad credit history and either misses or has late payments.
How does being Prime or Sub-Prime affect me?
I often hear people say they are looking for finance but are worried they will be turned down or have been in the past, this is a good example of someone who is or might be 'sub-prime'. Someone that is 'Prime' would be able to obtain credit by most high street banks or lenders.
If you a 'Sub-Prime' customer you should expect to pay a higher APR than 'Prime' customers, this is because you are considered a higher risk based on your previous credit history.
Can i still get credit if i am Sub-Prime?
Yes!
If you think you have an adverse credit history always search for a company that can offer credit to people with a poor credit history. Remember the more credit searches you have done then lower your credit score will be!
Should i ask for a Loan or Finance?
This would depend on the purpose of the borrowing. Loans are becoming very difficult to obtain in today\'s current financial climate, this is because a Loan is typically only secured to the person. However if you are looking to purchase a vehicle or similar items then you may want to consider the Hire Purchase Car Finance option.
Hire Purchase is a type of finance agreement that in simple terms means you 'hire' the item until the final repayment is made. This is a good way to lower the risk to the lender and improve your chances of being approved for finance if you have a poor credit rating.
Black Listed?
Many people think that the term 'Black Listed' still exists, when in fact today every ones credit history is personal to them. It doesn\'t matter that your brother has a poor rating or that the previous occupiers of the house you moved into had an adverse credit history linked to that address.
Let me explain..
Every time you apply for credit you will have a credit search done. Lenders in the UK can apply to three credit referencing agency\'s -- Experian
- Equifax
- Call Credit
These companies collect payment records for all the finance accounts that are associated to you - - Credit Cards
- Mortgages
- Loans
- HP (Hire Purchase)
- Store Cards
- Contract Mobile Phones
and so on....
They also record your address history, voters roll information and Associated people. This information is what lenders use to make a decision on your finance request.
Hopefully this has given you a better insight into finance terminology and how your finance application maybe scored or stored.
Article Source: http://www.articlesbase.com/personal-finance-articles/your-finances-4128743.html About the Author
Visit us - http://www.guaranteedcarfinanceonline.co.uk
or http:/www.rightdrive.co.uk
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