Credit Crunch - Recession What is different this time around?

It has been reported this week that many people do not see the distinction between credit crunch and recession.

In the last recession some really good companies got dragged down with the others but in the main it was as a result of a lack of business and cash flow rather than the availability of credit for those that wanted it and were good risk.

This recession, is differrent it started with a credit crunch there was simply a running out of money to lend. One consquence of this is that we we are seeing many companies and individuals turned down for finance that would have flown through before the credit crunch.

Lenders are being extremly cautious and only lending to those that they feel are ‘undoubted’ some people are being refused finance for relatively trivial reasons.

Companies are being declined because one of the directors has missed a mortgage payment or has been late paying credit cards. Consumers are facing the same problems for similar reasons.

The fact is that unless you take care of your current credit you may not be able to arrange future credit until the banks are re-capitalised and have more money available to lend.

Make sure that you are on top of your payments and if for any reason due to illness or redundancy you have been through a bad patch make sure that you update the notes on your credit files so that anyone carrying out a search will see the reasons why adverse has appeared and may look a little more sympathetically at your application.

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