Government to set up Consultation to look into Debt Management Companies

Many people who are in debt contact debt management companies.
These companies will negotiate on their client’s behalf and agree with the creditors to make smaller monthly repayments, usually over a longer period and sometimes freeze interest and charges.
Up to 150,000 people use these services every year and for a lot of people in debt this can be a lifeline.
However, lenders are under no obligation to accept lower payments and do not always help customers in severe difficulties.
Debt management companies charge a fee for their services which can be very costly and this is not always fully explained to or understood by their customers.
Citizens Advice and National Debtline will help people draw up plans to approach borrowers for free.
It is estimated there are 800 debt management companies operating in the UK and these are not currently regulated.
The Government has set up a consultation to look into the need for regulation and to see if customers are getting the appropriate help and advice to deal with their debts. As it stands these companies are able to behave and charge as they wish acting under no law or guidance.

Data held by Credit Reference Agencies

The data help by credit reference agencies:

• Name
• Date of Birth
• The electoral register
• Credit payment history
• County Court judgements
• Bankruptcy and administration orders
• House repossessions

Looking for an unsecured loan or credit card

Unless you are in great financial shape getting a loan or credit card is not as easy as it used to be.
Lenders are treating applicants on an individual basis taking into account their credit history and more people than ever are being refused loans and credit cards.
Companies are citing very different monthly interest rates with the best credit scores getting the lowest rates and the higher rates being charged for those deemed less creditworthy. So the applicant’s personal circumstances will determine the interest rate charged.
When applications fall into the high risk category, if the lender decides to go ahead, they will be charged considerably higher than someone with a good credit history.
It is not just new applicants that are being assessed. Existing credit card holders are getting letters saying that due to the economic climate their interest rate is being increased and in some cases their credit limit is also being reduced.
Of course, for those who are unable to get a credit card from the mainstream companies there are now lots of credit card companies who are targeting those with poor credit ratings and people who need to improve their credit scores. Aqua, Monument and Vanquis are heavily into this market and charge extremely high interest rates – up to 59.9% APR.
It is therefore very important that you check your credit rating and are fully aware of your financial position in order you can get the best deal possible when you are looking for a loan or credit card.