Credit Card Glossary: What sort of credit do I need?

What sort of credit do I need?

If you decide you want to borrow money, you need to ask yourself some key questions to help you decide your best course of action.

Do you require short term borrowing ?

If so, is the amount small ?

If the answer to the two questions above is 'yes', you may be best arranging an overdraft at your bank or borrowing on your credit card (credit card borrowing is never the cheapest source of finance, but for short term borrowing, many people like the convenience).

Do you want to borrow for a longer period, perhaps up to a year or more ? An overdraft may be useful, or if you have a 'gold card', you may be able to borrow amounts of up to £10,000 at a reasonable interest rate. If you have a life insurance policy, contact the organisation which issued it - you may find you can borrow money relatively cheaply by using it as security.

Do you want to borrow for say 1 to 5 years ? If so, consider a personal loan, borrowing against your life insurance policy or taking out a second mortgage.

Another aspect to consider is your credit rating. Any bad debts or county court judgements may affect your ability to borrow money. Check your credit record for more details.