Can fraud affect your credit rating?

If a lender is searching your name they may come across a warning against you if someone has used your financial or personal details in fraudulent way or used your name to apply for credit and forged your signature.  It will also show a warning sign if you have committed something fraudulent.Credit reference

In order for this information to be visible, the lender will need to be a member of CIFAS (which is not a credit reference agency), it is a fraud prevention service used by financial companies and the public authorities to share the information about fraudulent activity.  This is information that helps prevent fraud in the financial industry.

If the lender comes across a warning against your name it will just mean that they need to carry out further checks before agreeing to your application, which may involve you providing extra evidence to identify and confirm you are who you really say you are.  This could delay the process but is done to ensure that you don’t end up owing money you don’t owe.

Here is an article from the Money Advice Service that has some interesting information regarding identity theft and scam.

If you are refused credit, it will be wise to check your credit reference file before you apply for another credit card or loan so you can check to make sure all the facts about you are correct, which could affect your scoring if they are wrong.  A court judgement or a poor record payment in your name will also affect your credit record.  If you do check your reference file and notice there is some incorrect information on there you can get this changed or removed and can then add a correction notice to explain any special circumstances.

You may decide to apply to other lenders although you will need to be aware that whether they accept you or not they will leave a trail on your credit file.  This could potentially affect your credit, as lenders may assume you have lots of borrowing or have been refused by other creditors and may put them off.

How to choose the right loan

With so many different options out there it isn’t always easy to choose a good loan, which is why it is best to us a comparison website such as this one.

This type of site can be the ideal way to look at the differences between loans from all types of lender because it is hard to find this kind of comparison elsewhere, lenders just advertise how great their loans are on their website.Loan choice

Before choosing a loan talk to the lender about the actual costs, are there admin costs?  What will the costs be should you not be able to keep up with payments?  Is the interest you are paying now for the life of the loan?

However don’t just take the sales persons world for it.  When you sign the loan agreements read the small print to make sure you are getting the loan you expected, not one that completely differs from what you have arranged.

Different types of loan

Look at all the different types of loan that are available to you and choose the one that suits you.  If you have bad credit you might find that a logbook loan is best.  If your credit record is still good, maybe you will opt to go for a credit card or other type of personal loan that gives you more options and lower interest rates.  Shop around a bit and see what the best deal you can get is.  Don’t just assume you should get a certain type of loan because someone you know has that or it was the first one you were offered.

If you have other loans already think about whether it is a good idea to take out yet another one.  Your future self might thank you for avoiding putting yourself in more debt, although it might be very difficult to avoid if you really need finance fast.

What Is A Logbook Loan?

A logbook loan is a loan against a vehicle and is a simple way to arrange short term cash against your vehicle.  The borrower is expected to submit the vehicles V5/ logbook to the lender as a security against it.  The lender will retain the paperwork and will return these papers once the loan is paid back in full.Question

The borrower still gets to keep the vehicle to drive about in, providing they stick to the loan terms.  The disadvantage of these types of loans is that the lenders do not need a court order to come and repossess your vehicle if you have failed to keep up with your payments.  Logbook loans usually serve the instant cash requirements of individual entrepreneurs looking for quick cash without any credit checks.

The Eligibility most lenders usually follow:

You will need to show some sort of income, whether it is a payslip, that you are self–employed or are claiming benefits.  Providing you have a plan to how you can afford to pay the loan back most lenders would be happy for you to apply for a logbook loan.

The vehicle you would need to use as collateral should be finance free.  Some companies may still accept an application if the vehicle has 1 – 2 payments left.  The borrower must be able to show that they are over 18 years old and are a UK resident.  The vehicle must not be older than 10 years old unless it is a classic/vintage vehicle and has some value to it.

What usually happens during the process of taking out a logbook loan?

The potential borrower can either apply online, go into a store which would usually be found on the high street, or call a free phone number that is usually provided by the company.

Once you have made contact, the sales agent will ask you a few questions to see if you qualify.  They would usually ask questions regarding your personal circumstances and information regarding your vehicle.

You will usually find out within a few minutes of speaking to the sales agent if you qualify for a loan.  If the representative is happy with the information you have supplied, they will arrange for an agent to be sent out to you to validate your vehicle. You would usually be able to borrow between 50 – 70% of the value of your vehicle.

Finding the best value loans

It’s hard to imagine a world without people borrowing money, most people need to do it in the course of their lives, whether it is a business loan or a short term personal loan, they are hard to escape.

Some people borrow sensibly whereas other borrow without thinking too much about it, which can lead to problems.  There needs to be more advice and education when it comes to loans because it can be very easy to take out a loan but very hard to get out of debt once that loan has been taken out.Loan budget

The problem many people have is that they take out another loan to pay off their original one and end up in large amounts of debt because they have too many loans that are spiralling out of control.

There are useful comparison websites out there to help people find the best deals on a loan.  You can compare the amount of money you want to take out against the number of years you want the loan for.  Most lenders will have various interest rates, repayment periods and terms and conditions so compare all of these together before you make a decision.

Using a lenders own website can be useful to see the exact interest rate you will pay but it won’t be the most independent view because they will be trying to sell their loan.  This is why a comparison site can be very useful and generally offers independent advice.

Beware of short term loans in some cases because they have higher interest rates than other types of loan.  They are meant for what they say they are – ‘short term’ and so they can end up being very expensive if they are kept over a long period of time.  Some loans like this do not require a credit check because as asset is used as security for the loan, for example a loan against a car.

If you feel like you are having problems with debt then speak to a debt advisor at somewhere like Citizens advice or a debt charity such as Stepchange.

Because of the recent increase in the numbers of people taking out loans these organisations have been busier than ever and have many solutions to debt problems.

What is the difference between unsecured and secured Loans?

There is a big difference between the two of these, and it is vital you know the difference between the two before applying for one.  Most traditional lenders i.e. banks are more willing to offer you a loan if your asset is backed, especially if the loan is over £25,000.00.

Here is a bit about how different secured and unsecured loans really are.

A secured loan is when you use your property as security and is usually a cheaper option to borrow money if you are a home-owner looking to borrow a large amount of money.

These types of loans may also be known as  home-owner loans and are credit agreements that are backed using the equity in a property owned by a borrower. These types of loans are only available to those who are home-owners and could borrow anything from £5,000 to £125,000.

The amount you can borrow and the term and the interest rates you are offered will all depend on your personal circumstances and the amount of equity you have in your property.

The benefits of secured loans is that you can borrow much larger amounts than personal loans, which generally only go up to about £25,000.

If your credit history is less than perfect, you may have no other option but to opt for a secured rather than a personal loan. As your property is used as security it is easier to qualify for.

The repayment period on a secured loan can also be longer while the fixed monthly payments should make it easy to manage the repayments.

Like all loans it is important to keep up with the payments of your loan or it could result in the loss of your house. It would also be wise to shop around when choosing the best or worst lender for you, as you would be surprised at how the fees and charges such as repayment penalties change from different lenders.


Unsecured loans are available to those with at least a fair credit score where you do not need to be a home-owner to apply.  These would be offered by most banks and other lenders, personal loans can be used to borrow anything from £1,000 to £25,000. However you would usually get a better rate when borrowing anything from £7,500 and £15,000.

Unsecured loans are a quick, cheap and easy way to get your hands on that desired money you need.  One benefit is that they offer the flexibility for you to choose how long you have to repay; it could be fixed repayments for between one to five years.

The best loan rates are usually offered to those who are looking to make a repayment over three to five years, meaning you will be paying a higher interest rate over a shorter term.

Interest charges between larger or smaller amounts can prove a lot more expensive too, while the best deals are only really offered to those who can show a high credit score.

As an alternative to a secured or unsecured loan, if you were only looking to borrow a small amount of money, say of a few thousand at a 0% interest rate, you would be better off to apply for a credit card which can be a better option as you can borrow for up to 18 months interest free.

If it is a larger sum of money you need to borrow, and are a home-owner you would be better off considering re – mortgaging your property in order to free some cash.  The majority of mortgage rates are lower than secured interest rates. There would be a downside to this, including potentially high fees that could leave you paying the interest on the whole amount owed for a 25 year mortgage term.