Credit rating 'becoming more important'

22/05/2009

Lenders are taking a closer eye on the credit-worthiness of potential borrowers in the current financial climate, Defaqto pointed out in a wide-ranging new study released yesterday.

The financial research firm highlighted the fact that a strong credit rating was key in securing preferential rates on personal loans and other forms of unsecured credit.

Deals carrying annual rates of as low as 7.9 per cent for a £5,000 loan paid back over three years were also found by Defaqto.

This is despite the credit crunch and economic downturn, which has tightened up lending policies among creditors recently.

David Black, principal consultant of banking at Defaqto, said: "The best loan deals are restricted to those with good credit ratings.

"Personal pricing or 'risk based pricing' is taking a real hold in the unsecured market so, as an individual's credit worthiness deteriorates it becomes increasingly difficult and, when available, more expensive to borrow."

Building up a favourable credit rating is generally achieved by showing a responsible attitude to paying back money borrowed.

Always meeting a debt repayment on time and above the minimum amount is the surest way of ensuring better rates in future.

Tags; Debt Management and Banking, Young Family Finances, Credit Card Lifestyle,

• Share
• 
• 
• Store
• 
• Follow
•