What is a Credit Score? What is a Credit Record?

When you apply for a loan, the Credit Provider to enable them to make a decision will compile a credit score. Your credit score is a financial assessment of your credit risk - ie. whether a Credit Provider should lend you money or whether they shouldn't, all based on whether you are deemed as a high or low risk. How this score is devised is kept confidential and is individual to each Credit Provider. However there some common themes with compiling this score and they are as follows:

Credit Score looks at your current and past financial history, plus other personal details, and using mathematics, analyses what type of 'risk' you are.

By 'risk' I mean whether it is likely you'll pay back the money borrowed; whether you can really afford the repayments etc.

Factors that can affect your score include:

* Late or missed payments in the past

* County Court Judgements and arrears

* How much you currently owe - even if all your payments are up to date

* You not being on the electoral roll

* Applying for lots of new credit accounts - this is viewed that you are someone likely to or are getting into financial trouble

* The length of your credit history

* Financial associations - other people listed on your credit file that have bad debts can affect your credit rating

Why Your Score Matters?

Your Credit Scores matters because it is probably the most influential factor used by Credit Providers in deciding whether they will give you a loan/mortgage/other credit.

However, it is the lender who makes the final decision and they may well take in to account reasons for past credit problems. Apart from checking out your financial history, they will also need to look at your occupation; whether you have any equity in your mortgage, your income and savings etc and also your marital status and dependants.

The lower your credit score, the less chance you have of getting credit as a low credit score equals there being a high risk of you not paying your debt back on time.

It also shows whether you are on the electoral roll (which, if you are not, can affect your chances of getting credit as your home address is not 'proved') and any financial associations. A financial association is someone who you have been financially associated with now or in the past. It could be an ex-partner, your mum or dad or even a person who lived at your address before you did and has not been removed from your file.

If the person or people named as a financial association are not associated to you - ie. you have no joint financial obligations and the person is not living with you - then you can request that the credit reference agency have the details removed.

Keeping them on your file - particularly if they have experienced financial difficulty in the past - can have an adverse affect on you getting any credit.

When looking at approving a loan, Credit Providers will also look to see how much you are paying out on other existing debts - if you have lots, they may well turn you down for a loan even if your credit rating isn't that low. This is as they may feel that you would be financially overstretched with a further debt to service.

Your credit record - which is held by all the major credit referencing agencies such as Experian and Equifax and Call Credit plc. When you apply for a loan, the Credit Provider will carry out a credit search - and will give you a credit score based on the information within your file.

Common Consumer Complaints with Estate Agents

The UK still does not a have a system of regulating Estate Agents. Anybody can set up shop as an agent. Halifax Estate Agents and others are calling for regulation and so they should. Please see below the common problems and complaint areas:

• Putting excessive pressure on customers to use their mortgages brokers and solicitors to enable them to earn even more commission.
• Unfair contracts – The use of a ‘Sole selling right’ clause which results in the clients paying commission even if they sell or let to a friend! This is not the same as a 'Sole Agent' contract where the client can sell or let themselves and not pay the commission.
• Agents refusing to perform viewings!
• Staff with no experience – Sending someone who has no experience in negotiating or knowledge of the marketed property.
• No feedback after viewings – No suggestions or advice on marketing effectively.
• The Agent not effectively managing tenants
• Misuse of display boards - Displaying 'for sale' and 'to let' boards at properties not on their books, and even taking down competitor’s boards is very common. This is illegal practice and anyone who is aware of this should inform Trading Standards.
• Not advertising the property effectively and allowing the property to go ‘stale’.
• Overvaluing properties. Many agents will overvalue a potential client’s property in order to obtain the instruction.
• Failure to inform client of ALL offers - This is another illegal practice, as an agent must tell the client of all offers.
  

REPORT DISMISSES NEGATIVE EFFECTS OF IMMIGRATION AND EQUITIES ON BUY-TO-LET MARKET

Fears that a thriving equity market and a drop-off in immigration from other European
Union countries may bring about a downturn in the buy-to-let sector were dismissed
today in a report published by a specialist lender that Easy4life loans & Mortgages
deals with on a regular basis.

In the latest of its six-monthly reports on buy-to-let, the lender says that immigration
from other EU countries, which has given significant support to the buy-to-let sector in
some parts of the country by providing a ready supply of new tenants, is unlikely, as
some have predicted, to decline over the next few years.

The lender also says that the revival which the equities market has experienced
over the past 18 months does not present a threat to investment in buy-to-let, as the
two markets carry very different profiles in terms of risk and liquidity.


Immigration

According to the government’s Accession Monitoring Report which was published in
August, 427,000 workers from Eastern Europe registered to work in the UK between
May 2004 and June 2006. When the number of self-employed is added, the true figure
is believed to be closer to 600,000.
The Lender states “Most of these people are renting and, in some parts of the country,
they form an important part of the rental community for buy-to-let properties. This has
been particularly beneficial for landlords in these areas, as it has helped to keep void
periods to a minimum whilst maintaining rents at a reasonable level,”
Recent government restrictions on immigration from Bulgaria and Romania, which join
the EU next year, coupled with a drop-off in the number of workers coming from
Poland, could lead to a downturn in the buy-to-let sector in areas where large numbers
of foreign workers are concentrated. However, the Lender does state that this
scenario is extremely unlikely.
“Young foreign workers have provided substantial support to the UK economy over the
past couple of years and, as net tax contributors, they take little back in the way of
support or benefits,”
“If the number of people coming to the UK does ever begin to fall off, it is likely the
government will alter regulations to enable workers from other European Union
countries to take their place”.


Equities

In 2002, equity prices fell by 23.7%, whilst house prices grew by 25.3%. The slow
recovery in equity markets experienced since the downturn has been regarded as one
of the factors contributing to the rapid expansion of the buy-to-let sector, with some
seeing investments in bricks and mortar as having greater long-term benefits than
putting money into shares.
However, since April 2005, equity prices have been growing faster than those of
houses. In the past year to October 2006, Nationwide figures show that the average
house price increased by 8.0%, whilst equity prices grew by 14.7%. This reversal is
being seen in some quarters as an indication that investment may now flow back
towards the stock market in preference to the buy-to-let sector.
The lender goes on to state “If equities continue to outperform property over
the next couple of years, It would not be surprised if this has a slight downward effect
on buy-to-let purchases, but they think this would be much smaller than some might
expect, as professional landlords are unlikely to pull back,”
“Equities are very liquid investments and decisions can be taken at very short notice
on whether you want to buy or sell. This contrasts with the buy-to-let market, where
purchases are generally made with a ten or fifteen year outlook for returns.
“Also, it is the relatively easy access to funding, providing you have the minimum
deposit and are able to cover fees, coupled with the UK’s fondness for investing in
property that is one of the main factors behind the growth of the buy-to-let sector.
The Lender further points out that share prices have only just returned to the level
they were at in 2000, having previously reached a low in 2003. So, whilst the current
rise in the fortunes of the equity sector may encourage some investors to direct future
investments into equities rather than housing, it is likely that many investors will need
to see a sustained period of positive growth before feeling confident enough to switch
their allegiances.

buy-to-let market report by specialist lender (20 Buy to let Hot Spots)

A report on the buy-to-let market published by a specialist UK lender points towards continued growth in the sector and highlights a number of UK hotspots where investors currently see the greatest potential from property investment.
Of the 65 towns and cities in the report, the following 20 are listed as those where the
most profitable investments can often be found at present:

• Aberdeen
• Belfast
• Bournemouth
• Brighton/Hove
• Dundee
• Exeter
• Glasgow
• London
• Middlesbrough
• Newport
• Nottingham
• Peterborough
• Preston
• Sheffield
• Southampton
• Stoke
• Sunderland
• Swindon
• Walsall
• Watford

The lender said that “Investment in buy-to-let property has been particularly strong over the past six months. In the first half of this year, lenders advanced £17.5 billion on 152,500 buy-to-let mortgages, surpassing all records since the market took off ten years ago, Cities such as London are now back on the agenda for many property investors, as house prices have not risen as quickly here as they have in many other parts of thecountry over the past few years. The increase in people coming to work in the UK from other EU countries, coupledwith the growth of universities, has also helped to expand the number of tenants looking for properties, giving landlords new opportunities for profitable property investment.”