Credit cards are a convenient method of obtaining credit. They are available from all major lenders and provide flexibility for the consumer. Some basic facts about credit cards are set out on this page. Top 3 recommended cards These UK credit cards are ranked according to their popularity with users of this web site. Web site's online application... Egg Visa Credit Card Includes everything in one card. Good all rounder Citi Credit Card Classic / Platinum Classic and Platinum card very similar – only cash advance rates differ Capital One UK - Platinum MasterCard Popular online credit card If you're worried about the status of your credit, Checkmyfile provide a Free Credit Status Check . Credit Card Assist is a resource for people looking around for a no fee . Credit Card Assist 's survey of the main sites in the UK shows where you can get a no fee price and gives you most of the sites you might want to visit for the best unsecured credit card bad credit .

Credit - the facts

Buying goods and services on credit can be a useful way of spreading payments when making large purchases such as a car or furniture. This leaflet explains some facts about how credit works.

REMEMBER

Credit agreements will contain a lot of 'small print'. The small print will contain your rights and obligations under the contract. ALWAYS read the small print and ask questions if you do not understand any of the terms. Once you sign the contract you may find it difficult to back out.

Credit - Who can get it?

Credit is legally available to anyone over the age of 18. However, nobody has a right to credit. A credit company can refuse to give credit, regardless of age, finances or employment. If you have been refused credit then ask your local Trading Standards Department or Citizens Advice Bureau who may be able to explain the possible reasons why, what you can do to find out what information is held about you and how to go about changing incorrect information.

Who Provides Credit?

Credit can come from a variety of sources. Banks and the traditional financial institutions provide credit to individuals. Some retailers provide credit but many use finance houses. Loan companies often advertise in local newspapers. However, beware of Loan Sharks and unlicensed credit traders. As well as trading illegally they often charge exorbitant interest rates and are unwilling to act responsibly.

How much will it cost?

Credit is not free, unless the interest rate is 0% and there are no fees. Interest is often payable and there may be other charges such as broker's fees, arrangement fees and insurance. Always ask what fees are payable. The law requires these charges to be indicated as the 'total charge for credit' except when the interest is variable. You should see all charges in writing on the agreement. If you default on the payments there may be penalty charges and fees to pay.

What is Credit Scoring?

Before deciding whether to give a consumer credit, the creditor will consult credit reference agencies to see if the consumer is a 'good credit risk'. Part of the process is called 'credit scoring'. The consumer is awarded 'points' based on any number of factors including income, past history, employment, age, amount of credit and whether the consumer owns property. Each system is different and you will not be entitled to know your score. It is not unknown for a consumer to obtain credit from one provider but be refused by another for the same loan.

What type of credit information is held about me?

The credit reference agency will have details of all the credit you have ever taken. The agency will hold information on repayments, number of loans and your payment record. Credit is not just restricted to buying goods. Information may be held on your payment records for utility bills, TV Licence and Council Tax. Any County Court judgements for non-payment will also be held on record. Do not think that you can escape your record by moving house. Most creditors require addresses for the previous three years before making a decision.

I know I have a bad credit rating, can I still get credit?

Yes, you can. If you have debts, think very carefully before taking on new credit. Some lenders advertise as being willing to lend to people with poor credit ratings but usually charge high interest and require your home as security in case you do not pay. Avoid unlicensed money lenders and loan sharks.

What is a 'consolidation loan'?

A consolidation loan is a loan to pay off all your existing credit agreements. You will then only make repayments to the new creditor. Think carefully before taking a consolidation loan. Check the interest rates and be sure you can make the repayments on time, especially if the loan is secured on your home.

I've seen an advert for a Credit Repair Agency which offers to help clear my County Court Judgements, is this possible?

All County Court Judgements are entered on a Public Register. They can only be removed in specific circumstances. If the judgement is less than a month old you can pay it all and have it removed from the Register. If the debt is not settled within a month then it will be held on the Register for 6 years. If you pay off the debt later than a month then the judgement will still be on the Register but you will be able to obtain a 'Certificate of Satisfaction' from the Court. Remember, advice from your local Trading Standards Department or CAB is free.

What if I change my mind?

Only in very limited circumstances will you be able to change your mind and pull out of a credit agreement.

Can I pay off the agreement early?

It is possible to pay off an agreement before it ends. It is called 'early settlement'. If you settle early then you are entitled to a rebate on the interest payable on the agreement. See our leaflet 'Early Settlement Explained'.

What if I don't pay?

You should always pay your credit agreements on time. If you do not pay then you may face penalty charges or the interest will accrue. The creditor will be entitled to take action and depending on the type of agreement may re-possess goods and take you to court for the money owed, including interest and court fees. You may find it difficult to obtain credit in the future if you default on repayments. If the loan was secured on your home, you may lose your property if you do not pay.

Am I protected from over-stretching myself?

No, you are responsible for ensuring that you can repay all your credit agreements. You will not be able to blame the creditors if you take on too much credit. If you find you have over-stretched yourself and are having difficulty paying contact your local Citizens Advice Bureau for money advice.

Does buying on credit give me extra protection if there are problems?

Yes. The law provides that when goods or services are bought on credit, the customer has a contract with both the trader and the credit supplier. The two have 'equal liability'. This means you can take action against either party or both to obtain redress. The only restrictions are that the cash price must have been between £100 and £30,000 and the agreement is one regulated by the Consumer Credit Act. Credit Card transactions are also awarded this extra protection. Examples of where this can be of help are where the trader has gone out of business e.g. companies which go bankrupt leaving you stranded or dealing with faulty goods which were bought abroad.

What about Hire-Purchase?

Hire-purchase agreements are slightly different in that the trader supplies the goods to the creditor who then sells them to you. If there are problems with the goods then the credit provider is liable, not the trader.

Where can I get help and advice?

If you need help and advice contact either the local Trading Standards Department or CAB. If you are having debt problems contact your local CAB and ask for Money Advice.

A63D 01/01

This is relevant for the following nation(s) only:

England
Wales
Northern Ireland