The good folk at confused.com have risked the wrath of those living in God’s promised land by saying that in the UK, the closure of one in five accounts by the provider was due to non-payment. And Yorkshire residents exceed the national average by 13%, with 35% of accounts closed by the provider due to repayment failure.

But before thoughts of bringing out that old hackneyed debate about the north and south divide, the research also reveals that the North East is best at repaying with only 8% having their accounts closed for not meeting monthly payments. And, a close second to Yorkshire is the South East, 33% of which have suffered the same penalty. Incidentally, alongside the North East’s exemplary residents were the people of east Anglia, who also only had 8% of defaulters.

Head of credit cards at Confused.com, Joanne Garcia, said:
“Credit card users in all regions need to understand how damaging it can be to miss repayments. While it may not seem like a big deal to miss a few payments here and there, credit providers – which include mortgage lenders – leave no stone unturned when it comes to checking a person’s credit worthiness. It they see a history of non-payments it makes it much more difficult to borrow money.

The research at confused.com, which is owned by the Admiral Group plc don’t say how many people they asked, or how they got their figures, but it is hoped that they have done their homework about the Yorkshire figures. Although confused.com should know what it’s talking about of course, as it generates over one million quotes per month. From its origins in 2002, it has expanded its range of comparison products to include car insurance, home insurance, travel insurance, pet insurance, van insurance, motorbike insurance, breakdown cover and energy suppliers, together with financial services products such as credit cards, loans, mortgages and life insurance.

Guest Article by Neil Camp 

Both Barclaycard and confused.com have introduce services which not only speed up the process of applying for a new credit card, but also quickly assess the likelihood of a successful application.

Barclay claim that they have created a unique online eligibility test which is designed to help potential customers find out if their credit card application is likely to be successful, or fail at the first hurdle.

This does away with the need to complete application forms, if the application is likely to be met with the waste bin. It will only leave a search ‘footprint’ on a person’s credit record, as it isn’t a formal application for credit, and will not affect their ability to get credit in the future.

And it’s the minimal use of force on a person’s credit record, that Barclaycard is heavily promoting.

Amer Sajed, chief executive of Barclaycard UK, chirruped:
“Consumers currently need to apply in full for a credit card UK, without knowing whether they are likely to be accepted or not, leaving a search on their credit file which can potentially have a negative impact on their credit rating. This unique pre-application check solves this problem. The check can be completed in a few minutes and gives consumers a good indication of whether their application will be accepted.”

The service is available via the Barclaycard website. The company claim that since its launch, 4000 potential customers have used the pre-application check to determine whether they would be accepted for a Barclaycard, giving them a better idea of whether or not they would be successful in an application for a credit card.

In a similar effort to win the hearts and minds of those desperate for some plastic money, confused.com has launched a new credit profiling tool. It basically enables customers to see how likely they are to be accepted for the credit cards offered on its site. Confused.com state they are the first price comparison site to offer such a service which, as well as being free to use, leaves no credit check footprint.

Joanne Garcia, Head of Credit Cards at Confused.com, said:
“Now is the time to take control over your debts. It’s sensible to start by paying off the most expensive debt first, so don’t waste this opportunity to get rid of those costly credit cards. Switching to a cheaper credit card and/or paying back just a small extra amount each month can be really effective, especially if you are currently paying off just the minimum each month.

“But as the rules around lending get more stringent, trying to switch credit cards can be a time-consuming and frustrating exercise. The tool on our site will give customers the confidence that they are applying for the right product which should save them both time and incurring unnecessary credit footprints.

“If you can’t switch to a cheaper credit card, you can still make staggering overall savings by making more than the minimum repayment every month.

“For example, if you have a credit card debt of £5,000 on a standard rate of 14.9% and pay back the minimum of 2% each month, it could take 36 years to pay it back and you’d pay nearly £7,000 in additional interest. By paying just an extra £10 a month, the debt would be repaid in just over 16 years, and the additional interest paid would be a far less eye watering £4,200. If you could stretch to paying off an extra £50 per month, it would take just six years to repay the original debt, plus just under £2,000 in interest.”

Guest Article by Neil Camp

And unless one takes the unwise decision to try and lie, credit ratings are difficult to get around. Apply for anything from a mortgage to a mobile phone and the chances of you defaulting on the deal are assessed by lenders and retailers looking at your past record. Any missed payments and your record is likely to be blemished; denying you the best deals, or even a deal itself. And in these straightened times, credit scoring (by which an individual will be scored as to their ability to pay, based on circumstances and past performance) is getting more testing.

So what does it mean when Britain’s sovereign credit rating is under threat? Currently Britain is regarded as the very credit worthy, in other words, deserving of an AAA rating. This is coveted by nations as a sign of their status and resilience. It is a rating enjoyed not just by the U.K., but also the U.S, and many in Western Europe.

Now one of the biggest credit rating agencies, Standard and Poor’s (S&P), is casting a critical eye over the U.K. And S&P have changed their view on the U.K.’s debt outlook from stable, to negative. This reflects the fact that the U.K. government has taken quick and dramatic steps to stop its banking system from collapsing. But what this has done is to effectively take debt away from the struggling private sector and deposit it with the less struggling public sector. Now the public sector is straddled with a mountain of actual debt and a mass of contingencies.

This has caused S&P to worry about the U.K. government’s ability to cope with this burden over the coming years.

So what will actually happen should the U.K. lose it’s star triple A status.

The consequences could be catastrophic and the main worry is a sudden exodus of cash from the country as foreign investors rip out their money and leave for safer climes. And this might almost be an automatic process, as many funds which invest on these shores are only allowed to invest in triple A rated currencies. This is what happened to Japan when it lost its coveted third star .

Now, all might not be lost, because although the U.K. might be on S&P’s watch list, the optimistic can hang onto a few bright spots. Experts have calculated that there is only a near 40% chance of the third A being lost in the next two years. On hearing the news, the markets did a slight wobble, but recovered, showing they did not collapse with the news, and, the pound actually improved. Also, the U.K. is not alone in possibly losing its third A, with some European nations and the U.S. suffering the same fate in the medium term.
Indeed, the state of the world economy is such that there might not be many triple A states left over the coming years, so the U.K. will be in very good company.

Finally, others are pointing out that S&P and other agencies like it, are currently suffering a major credibility problem, after it was they that gave triple A investment status to many of the U.S. mortgages which turned out to be toxic loans.

So, what do they know?

Guest Article by Neil Camp

But although Zopa is a social lending exchange, it is not a bank, and many compare it more to eBay, than HSBC.

It works by matching cash-rich individuals looking for good returns for their money, with people wanting money for genuine reasons. And although it might have altruistic leanings, this is not for people at their last resort. Only people with good records are allowed to play, so, in a way, it can only claim some social awareness brownie points.

And if you’re wondering where Zopa comes from; the initials come from Zone Of Possible Agreement, which refers to what exists between two parties in an agreement.

Launched in 2005, Zopa boasts that it offers both borrowers and lenders the best rates, because it does not have the overheads and regulatory regime of the mainstream banks. With a Zopa agreement, it is the market that sets the rate, not the authorities.

But that’s not to say that Zopa is unregulated. It comes under the auspices of the Office of Fair Trading and is a member of the Finance and Leasing Association, and the anti-fraud CIFAS. But, from the lenders point of view, it is not regulated by the FSA, which means that any money lent to borrowers through the scheme is not protected.

So what makes the ideal Zopa customer?

You must have a recognisable identity, a visible credit history, an income that demonstrates you can afford the loan and a good track record of repaying debt.

Don’t bother if you have lots of credit cards that haven’t been paid for some time, high levels of unsecured debts, a poor debt history, or CCJs. Prepare for a detailed credit scoring before you can sniff out the money.

You can borrow up to £15,000 and the interest rate which is decided by your status, divided into five categories: A*, A, B, C and Young (for borrowers aged between 20 and 25). The riskier you are deemed by Zopa lenders, the more you will have to pay for your money.

But the rates for a Zopa, at the time of writing, are competitively placed in the market. For example, if you were to borrow £5,000 over three years and you were A* status, then the rate you would be charged is 8.1%. This compares favourable with MINT at 13,9%, Smile at 12.9%, First Direct Loan at 11.9% and Abbey at 8.9%.
 

Guest Article by Neil Camp