A credit crunch is what happens when banks start panicking and start stock piling money or for anyone that requires the formal dictation:

"A period when there is a sharp reduction in the availability of finance from banks and other financial institutions, particularly from small businesses. This usually occurs during a recession or tough  economic times”.

 

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Is the credit crunch likely to strike me?

With America's mortgage market in a downward spiral, banks worldwide are starting to become very choosey whom they lend to, as you may or may not have recently experienced.

My most recent experience is my property re-mortgage. My Bank Manager was more than eager to give my wife and I money to set-up home, but those day’s have sadly well and truly sailed into the money horizon. Now banks want to check, double check and in my case triple check that I could afford the home loan. Did I feel a little perturbed after this ordeal? Most definitely!

Banks are particularly twitchy when it comes to dealing with financial institutions that might be exposed to the sub-prime US market i.e. the ‘people’ who gave wannabe ‘Home Owners’ a loan commitment they could have never afforded in the first place!

The regrettable result is that the cost of borrowing has risen well above target rates set by institutions, such as the Federal Bank of America or the Bank of England.

So then, should I start worrying?

NO! in a word. Things are going through a difficult time but it is starting to get easier to be approved for a loan, especially in the US and UK, though only if you are a good credit history.

That’s me! How can I manage with a poor credit history?

Anyone with a ‘tarnished’ credit history should and must not despair. There are still a number of financial institutions that are willing to look at your situation and with the right product your worries will soon take a back seat whilst you concentrate on living!

    

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