Getting help
You can get help before and after you borrow money. There’s even help to correct your credit report and deal with problems with goods bought on credit.
Help with debt
If you’re having difficulty keeping up with your payments, don’t ignore it. Even if your debt is not secured on your home, failing to pay it could put your home at risk. This is because the lender may ask the courts to allow it to secure the debt on your home. If this happens, then the lender may be able to repossess your property.
No matter how bad things may seem, the good news is that you can get free and expert help. Several organisations can help you find out where you stand and your legal rights. They can also arrange for a debt adviser to deal with lenders to suggest a way forward.
Don't struggle alone – get help now – see Related links.
Be careful about offers to consolidate your borrowing into one easy monthly repayment. You may end up paying more overall and increasing the risk of losing your home if you don’t keep up repayments. Speak to a free, independent debt adviser first.
Protecting your borrowing
You can buy insurance to protect yourself if you can’t make the repayments, for example if you become ill or lose your job. The most common types are:
- payment protection insurance (also called accident, sickness and unemployment insurance
- income protection (or Permanent Health Insurance – PHI), and
- short-term income protection.
Before taking out any insurance, check that you really need it and that you’re not covered already. Shop around for the best deal and check whether there are any restrictions or exclusions that could make it difficult claiming under the policy.
Shopping around for credit
If you can afford to borrow, shop around to find the best deal for you. Check the APR, but remember there are other things to consider. You can use a credit broker to help you shop around and arrange a loan. But check if they’ll charge for this. By law, if the broker has found a loan for you but you do not take it within six months, the maximum they can charge you is £5. You are entitled to a refund of any fees over this amount. Check the broker’s refund policy in their terms and conditions before you use one.
You can shop around by using comparison websites that let you compare products from different companies. If you’re looking for a loan from a home credit lender, you can use Lenders Compared, an independent comparison website.
Be careful not to apply for credit until you have decided on the best deal. Applying for several credit products within a short period can damage your credit score – see Credit scoring. Even when you’re just shopping around, lenders may want to check your credit report before giving you a quote for the cost of credit. Make sure you ask the lender to make a 'quotation search' instead of a 'credit application search'. Lenders know that quotation searches do not represent actual credit applications, so they shouldn’t harm your credit score in the future.
Problems with goods or services bought on credit
Sometimes, as well as the supplier, your lender is responsible for your purchase. So if the goods are not delivered or are faulty or not as described, then you can make a claim from the lender if you used:
- a credit card (but not a credit card cheque)
- a store card, or
- a loan arranged by the supplier to buy its product.
This could be useful if, say, the supplier goes bust or is based overseas.
The law (Section 75 of the Consumer Credit Act 1974) gives you this protection but there are exceptions to when you can claim. For example, the lender is only liable if the cash price of the goods or services you pay (or part-pay) for is over £100 and no more than £30,000
For more about credit card protection – see Getting help (Credit cards).
You have different rights if you have a hire purchase agreement or your purchase costs more than £30,000 – see the Directgov website.
Making a complaint
If something goes wrong, for example you think you have been wrongly charged for something, contact the firm and ask them to put things right. If you’re not satisfied with their response, you may be able to take your complaint to the Financial Ombudsman Service. The firm will give you the details of the complaints procedure. See If things go wrong for more information.
Loan sharks
If you’re approached by a loan shark or if you’re having problems with one you’ve borrowed money from, see the Directgov Stop Loan Sharks website.
Credit reports
If you think there is incorrect information on your credit report, you can either contact whoever registered the information, or ask the credit reference agency (see Related links) to take the matter up for you.
Asking the credit reference agency to take up the matter
You will need to write to tell them what you think is wrong. It may help if you enclose any documents you have which support your claim, either by post or, where available, online. Include your name and address, the main reference number quoted on your credit report and state whether you believe the entry should be removed or corrected. It can help if you enclose a copy of your report, clearly highlighting the entry you are disputing.
The credit reference agency will investigate your comments by contacting the organisation that has registered the data.
The organisation responsible should investigate and report back to the credit reference agency within 28 days. If the disputed data is removed or corrected, the organisation must notify all the credit reference agencies where it has registered the data.
The credit reference agency you contacted will then write back to you confirming the final outcome. If your credit report has changed because of your query, the agency will usually send you a copy of the amended entry or a new credit report.
If you’re not satisfied with their response, you may be able to take your complaint to the Financial Ombudsman Service. See If things go wrong for more information. Or, if more appropriate, you can ask the credit reference agency to add a notice of correction (a statement of up to 200 words) to your credit report, to explain your side of the story. You will need to provide the wording you want to use.