Mar 28, 2013 Simon Williams
Ever since the global recession, individuals around the globe have had to create budgets and think carefully each time they give out their cash or swipe credit, debit and ACH cards at point-of-sale locations. Not only is inflation up and employment down in many markets, but a lot of people have found themselves unable to pay off old debts, digging themselves into deep holes they can't get out of.
However, this also means that not only are they in debt, but they likely can't tap into other forms of credit for additional purposes. For instance, those that have many past due accounts probably can't open up a credit card, or at least one with a decent interest rate.
That said, in the United Kingdom, many alternative credit sources have cropped up to answer this need. Numerous companies are doing what banks mostly have not been able to - providing funding to a slew of different people who need help. There have been many reports in the media lately that show that British banks are largely denying individual, sub-prime applicants because they don't have good credit scores. However, consumers should know that they have a bevy of options in their wheelhouse.
Alternative lenders becoming more common
In the U.K., many people are finding that they can better the chance they qualify for loans and other forms of credit via alternative lenders, according to Mortgage Introducer. The news source said that there has been an increase in gross mortgage lending and bridging lending, meaning that more people are seeking out such loans. However, this also indicates that though there are more applications coming in, there are likely more people being denied funds by banks and big corporations.
The news outlet said that in 2012, the number of loans given out by lenders of all kinds rose 23 percent, but by the end of the year that figure dropped 3 percent. Experts, however, say that the presence of sources of alternative funding accounted for the majority of the increase.
"High street bans are keeping their criteria so tight they're effectively ruling out any ventures that could be classified as development. That would have left thousands of prime investment opportunities high and dry if it wasn't for alternative finance," West One Loans chairman Duncan Kreeger told Mortgage Introducer.
Knowledge is key
Consumers can save a lot of time that would otherwise be wasted applying in vain at banks by becoming aware of what their credit rating is. According to ClearDebt, citing a Confused.com report, around 61 percent of U.K. citizens with credit cards aren't sure what their score is. Furthermore, 40 percent of respondents said they'd never looked into their scores before.
First, people need to do this to assess their viability and make sure there are no errors present. Then, if they find their figure is not up to snuff, they can pursue alternative routes. For instance, individuals might discover that their Payment Reporting Builds Credit score is much higher and will be more attractive to lenders that embrace the ranking method.