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The Ever-Changing Business of Credit

Posted on August 28th, 2011 | admin

The world constantly shifts between times of economic prosperity and drought, and this has an effect on all aspects of finance, from government, investment banks and lenders, to the individual consumers and their spending habits. While all of these sectors have different scope, they are intrinsically linked, and as a result, the state of a country’s economy, alongside the global economy will ultimately affect you.

This is demonstrated by money and credit, which is as dynamic as the economy that supports the lending policies that many of us rely on.  Over the last few years, the state of the country has changed the way lenders behave, and they are far pickier with offering credit. Lenders have been hit by the financial crisis as much as anyone else, and for their own safety against this, they have been opting to improve their profit margins by restricting who they give credit to.

Lenders, organisations and companies are now desperate to deleverage, to minimise the risk involved with owing debt in such an unstable time. This slows down the economy, and the reduced spending again restricts the availability of credit, in turn causing the consumer to behave in the same way. Consumers who were able to obtain credit easily before, are finding they can no longer do so, and so the importance for them is now with paying outstanding debts, and to increase savings.  Even consumers with good credit and finances are delaying large expenditures in favour of this.

Adapting to New Credit Models

With these significant changes in the market of credit cards, what are the best practises to ensure you can still gain credit, and keep your finances buoyant in the face of economic uncertainty? It all depends where you stand. Lenders are far less likely to give you a loan or credit cards if your score is not sufficient, since they cannot currently deal with the high risks involved. Unfortunately this adds to the cycle of decreased consumer spending, and may in the long term serve to make the problem worse. Because of this, if you stand well with your finances, your are encouraged to keep using your credit cards as much as you ever have.

The Best Places to Look for Credit

There are options available, which have surfaced only recently as a result of economic tension, to help those who want to use credit but are finding it difficult to obtain. Credit cards offered by major lenders such as Orchard Bank, Capital One and HSBC are offering offers for those with limited, fair or bad credit, which help you rebuild your credit report quickly, with similar offers and rewards on purchases and balance transfers.

There are many websites which help compare the best deals, so you can decide which is best for you. It is easier than you might think to improve your credit score, and after a year or so of successful credit building you are able to transfer to better credit cards so you can continue improving your financial stability.

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