Loans - Healthy Credit

By David Collins

When it comes to applying for a loan or mortgage, there are many factors about yourself and your financial history which the banks will want to investigate. Credit checks help banks and other financial institutions to double check that you are suitable for lending to. If you've a healthy credit record - i.e. have always paid bills on time and have no outstanding debts - then you're likely to be approved.

However, for financial services such as personal loans, it helps to have a strong credit record. With the current credit crunch in full swing, banks and building societies have become increasingly wary of how much they lend, and who too.

Every one of us has a credit record, this takes into account our financial activity, and helps potential lenders to assess your borrowing and spending habits before they approve you. In the case of products such as unsecured loans - which don't involve collateral - having a healthy credit record can help increase your chances of approval.

So what can you do to ensure that you have a healthy credit record, thus increasing your chances of being approved for loans and mortgages?

• Keep an eye on your credit score - find out your credit score by using websites such as Experian, which will allow you to view a history of payments, direct debits, mortgage payments and also any outstanding balances you may have against your name.
• Once you've analysed your current credit rating, draw up some spending plans in order to see about getting any discrepancies resolved. By taking action to clear any debts or pending payments, you can help your credit rating by showing that you are able to repair it.
• Tie up any loose ends - if you've payments pending on products such as credit cards and loans, see about changing your spending habits in order to pay them off quicker. If you're able to afford it, see about paying off any loans or credit card debt sooner than your repayments say.
• Paying off certain products can not only help you straighten out your financial portfolio, but it could also free up some much needed money for the future, as well as helping to increase your chances of applying for further financial products.
• Don't be afraid to talk to someone - if you have any concerns about your current debt levels, or would just like some advice to help in the future, speak to your local Citizen's Advice Bureau representative.

By taking the time to ensure that your credit record is healthy, you can help increase your chances for future borrowing, which could come in extremely useful if you're looking to apply for loans and mortgages.

Looking for personal loans? Search online for a wide range of loans - including secured and unsecured loans - to find a deal that's right for you.