Need a loan? Easy steps to polish your credit history
In the financial crash, so many people had problems that left them with adverse credit histories that it is only a matter of time until somebody decides there are enough people with issues that it makes financial sense to take a bet on them once again.
In fact, there are tentative signs that this may be under way, and one well known sub-prime lender is apparently "considering its options" in this space.
The mainstream lenders are already in on the act. Some will still lend if you have a missed mortgage payment in the past - but the conditions are very strict. The main thing they look for is how you handled problems when they arose.
If you were laid off, paid all you could even if it meant that you used your savings, engaged with the lender and came back on track, then in credit terms you are a safer bet then a first-time buyer who was never tested in this way.
Of course, this has to be within reason, people two years behind on payments will likely face a lock-out for the full duration of their credit history, which is six years from the last missed payment.
What can you do to help demonstrate that you are back to being a viable credit client? It isn't an exact science, but if you can keep your financial affairs looking good for about a year or so it will help to ensure you are looking good again, and yes, it takes far longer to fix a credit history than it does to wreck it.
• Don't be overdrawn, even if you have an overdraft, don't go into it.
• This also means having no 'referral fees' or 'un-paids' on your account. Referral fees are when you exceed a limit but the bank lets you make the payment anyway, typically you'll see something like €4.44 charged when this happens.
• Demonstrate that all bills are being paid, and pay them online or by standing order. Make your finances auditable and that will help to show how you run things. Any underwriter can see if you are a late payer even though it isn't on a credit score by measuring the time between payments.
• Credit is moving money through time, that means you'll want to show excess of income over expenditure in the present to ensure you don't get overburdened. That 'excess' is known as 'savings'.
• Save where a bank can see it, and don't dip into the savings, otherwise it isn't savings, it's just a segregated part of your spending money.
• Realise that you may have to start out qualifying for smaller loans, and that things like getting a mortgage may still be years away.
Getting back in the good books takes time, but with several hundred thousand adults affected by credit issues, it means a large chunk of the present market has past impairments. When credit eases, make sure you are not unnecessarily locked out.
Karl Deeter is compliance manager at Irish Mortgage Brokers
Sunday Indo Business