With more and more people finding it difficult to arrange finance of all kinds in the current economic climate, a great many of them do not understand exactly why this should be. Bad credit is not a new thing; however what has changed is the way the lenders evaluate their applicants.

Since the onset of the credit crunch there has been a significant reduction in the number of lenders that are available in the market place. However the number of people looking to borrow money has not decreased proportionally. What this means is that the lenders can afford to be choosier as to who they lend to. Whereas previously they all had to fight for the business because the competition was so fierce the lenders that remain have the luxury of having more applicants than they can deal with.

In the good old days when there were so many lenders, in order to generate the level of business that they required they had to do one of two things. They either had to offer the best rates available and aim for the cleaner end of the market, or open their score cards up to attract applications from people that may have had previous credit problems. This made it easier for all types of applicant to not only get the finance that they need, but at also at favourable interest rates.

So what is bad credit?
People are deemed to have a bad credit record if they have currently or previously experienced any of the following issues;

1) Have been the subject of a county court judgement (CCJ).

2) Have any defaults showing on their credit profile.

3) Are behind with any bills or credit card payments.

4) Have any arrears on their mortgage or any other type of finance.

5) Are in a debt management plan.

6) Are in an individual voluntary arrangement (IVA).

7) Are registered as a bankrupt or discharged bankrupt.

Whereas there were lenders that previously specialised in helping people that did not have the best credit history, because there is enough business available to them without having to cater for people with credit issues they choose not to. On top of all that they have not only stopped lending to people with bad credit they have been able to tighten up their score cards so that more people fall into the “bad credit” category.

There are some payday loans lenders that will consider offering short term loans to people that have suffered with credit problems, but not so many now as there were a few years ago. When payday loans first became popular in the UK very few of the lenders carried out a credit search as part of their underwriting process. Although now it is the other way around most of the lenders will now carry out a credit check and there are now very few that do not.

So as a result of the downturn in the economy since the credit crunch, more people have been classified as a bad credit risk, and less lenders are willing to help them.

Author Bio: Tom Dawson is a UK finance expert who has worked in the UK finance industry for a great many years, if you are looking for bad credit loans or in fact loans of any kind visit his website today.

Category: Finances
Keywords: bad credit loans, loans, finance,credit