If you are looking for a loan or line of credit be ready to be depressed. The fact is that even if you have a perfect credit history, you're likely to be offered a smaller loan than you applied for at an interest rate far higher than you'd ever expected. And there are likely to be onerous conditions attached.



Take homebuyers for example. Over the last 18 months, the number of mortgage packages on the market has fallen from 30,000 to just over 2,500. Now it could be justifiably asked how the UK mortgage market could defend the existence of 30,000 different packages (and how bright minds could even create 30,000 different packages). Not long ago first time buyers who had scraped together 10 per cent of the purchase price would be certain of getting a mortgage. No longer!

Today, 90 per cent mortgages are a bit like hens teeth. And if you can find one, you'll be faced with a high interest rate of at least 5.99 per cent making the minimum monthly repayment on a 25 year 150,000 pound mortgage 966 pound a month. If you are more affluent and can raise a 25 per cent deposit, the cheapest interest rate will be 2.99 per cent which makes the equivalent monthly repayment 711 pounds - a saving of 255 pounds.

The fact is that your credit history needs to be perfect to get a mortgage offer. If you have missed any payments on your HP, credit cards or loans then you will really struggle to find a lender. One person we've heard about even had his mortgage application refused because he had no loans or credit cards! The lender said that his credit history was insufficient to enable them to make a decision.

And if you're after a personal loan things are still tough. In the last year interest rates for personal loans have soared. If you have a perfect credit history you can now hope for a loan at about 12.3 per cent interest - that's 6 per cent higher than just twelve months ago.

And those already enjoying an overdraft need to watch their backs. Banks are getting into the habit of withdrawing overdrafts at little or no warning and limits are being significantly reduced. A banking client we have heard about was told by his bank that they were withdrawing his 250 pounds overdraft facility and when he complained they reinstated it but slashed his credit card limit from 6,500 pounds to 1,200 pounds.

Interest rates on credit cards have also increased. Typical rates are now in the 17 to 20 percent range and credit card operators are sharing far more information about you than ever before. They check your balances with other cards and analyse your payments, whether they are made on time and whether you pay just the minimum. They even swap information about whether you use your cards to withdraw cash. (Apparently cash withdrawals are an early sign that someone is in financial difficulty.) And if you are on an interest free deal, they will also share that information.

Whilst all this extra information is useful in identifying credit card applicants who may be taking on more then they can cope with, it is also enabling credit companies to be far more selective on who they will accept. In the six months to October last year, 3.5 million credit card applicants were refused.