If you are considering any sort of borrowing this year, the most important thing to make sure of is your credit rating – the key to borrowing success.

David Black, principal consultant of banking at Defaqto says: "The best loan deals are restricted to those with good credit ratings. Personal pricing or ‘risk based pricing' is taking a real hold in the market so, as an individual's credit worthiness deteriorates it becomes increasingly difficult and, when available, more expensive to borrow."

To check your credit you can go to one of the three UK credit agencies – Experian, Equifax or Callcredit – and pay a small fee to see exactly what the lenders see.

Black adds: "In essence lenders consider many aspects when deciding whether, and if so, how much and at what rate, to lend. An individual's credit report, employment and property status, affordability, indebtedness, financial behaviour and usage are all part of the mix in the lender's decision making process. Many providers concentrate the majority of their lending on existing customers and a ‘cautious approach to lending' is becoming an increasingly commonly heard phrase. Existing customers are not immune from this process as lenders will also monitor their creditworthiness."

Talk to your mortgage adviser about your score and your potential. They will be able to give you the low down on what you can get and how much it will cost you. They will also give you tips and hints which could help you increase your score, and increase your chances of borrowing success.

Black concludes: "Lenders are understandably selective about who they will lend to and turn down many applicants. Of those to whom they're willing to lend typically two-thirds should be offered the advertised loan rate. The remaining one-third may get offered a loan facility at a higher rate. Another factor to consider is that the borrower may not be able to borrow as much as they want."

SOURCE: Defaqto, 21/05/09

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