In­no­va­tive way to get a loan... but rates are high

The Scottish Mail on Sunday - - Wealth - SALLY HAMIL­TON ON THE LIVELEND RE­WARD LOAN

PER­SONAL loan rates of­ten ap­pear a bar­gain in ad­verts from banks with deals as low as 3 per cent. But these are of­ten teaser rates avail­able only to bor­row­ers with squeaky clean credit records.

More than one in five ap­pli­cants will not get a look in – and will be stuck in­stead on a higher in­ter­est rate for the du­ra­tion of their loan. High-tech lender LiveLend has now in­tro­duced a new type of loan where bor­row­ers with a less than sparkling credit record start on a higher rate of in­ter­est, but ben­e­fit from the rate drop­ping if they man­age to clean up their credit score.

It prom­ises to de­liver rate cuts ev­ery three months with 2 per­cent­age points chipped off the loan rate for ev­ery 25-point boost in a per­son’s credit rat­ing.

In­ter­est rates range from 10 to 37 per cent and the loan can be

paid off early with­out penalty. Credit scores can be im­proved not only by meet­ing re­pay­ments on time but by fix­ing any mis­takes on a credit record – such as an old ac­count ap­pear­ing as ‘open’ when it is ‘closed’.

Sign­ing up to the elec­toral roll and mak­ing sure your name is on util­ity bills can also help mat­ters.

An­drew Hag­ger, of prod­uct scru­ti­neer Mon­ey­comms, likes the fact peo­ple are en­cour­aged to sign up for their credit score – some­thing other lenders could learn from.

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