Before you get a loan, credit card or store card

Remember it almost always costs to get credit or borrow money. That is, you’ll pay back what you borrowed plus an amount of interest on top. The higher the interest figure, the more the loan will cost you. Are you getting a good deal?

Ask yourself whether you really need what you are buying, and can you really afford the repayments if you do. Credit can be very tempting, but also very expensive. Circumstances can change – if you lose your job for example you can find yourself in a lot of debt very quickly.

Make sure you have read the agreement fully and have understood it. Never sign a blank form, and keep a copy of the agreement. If you change your mind about it get advice as soon as possible, as some agreements can be cancelled within certain time limits.

If you find that you cannot keep up with the repayments, get advice as soon as possible, from one of the organisations here. Don’t expect independent advice from the company you owe money to, or take their word for how much they’ll accept as a minimum payment. See ‘Money Problems‘.

It is illegal to lend money to people as a business without a licence. Lenders (sometimes called ‘loan sharks’) often use illegal means to get money back. Have you been offered a loan without paperwork? Been threatened when you couldn’t pay, or had your bank card or details taken off you by a lender? Been asked to do something else for the lender instead of payment? If you think you might have been bitten by a loan shark, you can get advice in absolute confidence from the Illegal Money Lending team.

Credit reference agencies

Shops and banks use credit reference agencies to decide whether you are a credit risk, before lending you money or agreeing a contract with you. You can request your statutory credit file from the credit reference agency by post or online for  £2. Other more expensive reports are offered, but not necessarily needed. noddle.co.uk offers free unlimited credit checking. You have the right to correct any inaccurate information held about you by a credit reference agency. A factsheet explaining your rights is available from nationaldebtline.org.