Friday 11th of December 2009
If you are one of the Britons who have found credit doors slammed in your face or a bad credit report holding you back then you may have been tempted by doorstep loans.
A recent survey by the Office of Fair Trading found that over half of the borrowers surveyed admitted they were reliant on doorstep loans, although if you fall into this category you may find an individual voluntary arrangement (IVA) proves to lead you to more stable financial ground.
Commenting on the report, the Consumer Credit Counselling Service (CCCS) says while such loans may not be the best way to obtain money, borrowers like yourself may think you have no other option if your poor credit score is hindering your chances with the bank.
"Alternatives are hard to come up with. People say credit unions, but not everybody has access to these. Often you have to have saved up with them, too," CCCS head of media and public affairs Frances Walker states.
If you have found lenders and credit unions are unable to take you on, then you may want to start taking steps to improve your credit rating, rather than denting it further.
One of your questions on IVAs may be how long they leave a mark against your name. IVAs stay on your record for about six years but as soon as you have completed this agreement you can start building up a positive credit report.
Doorstep lending is where people like you who have money concerns are offered unsecured loans of a low amount - a couple of hundred pounds - but with high interest repayments attached.
Rather than risking falling further in debt for such a low amount, clearing your balances with an IVA could mean you can easily meet such expenses in the future without resorting to credit.
By Rachel Powell
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- IVAs could help Brits in serious debt
