10 Summary of Session 3

In this session you have studied the different ways that money can be borrowed and the various organisations in the UK that are active in the lending business.

You have also examined the credit scoring process in some detail and looked at the things you can do to maximise your credit score and open the door to the best deals to borrow money. Certainly, one thing you should do after completing this course is to check your credit records!

You have also explored how the levels of interest rates on debt products are set – and in so doing reviewed the wider economic considerations that affect the general level of interest rates, including the key role played here by the Bank of England.

You should also have learned that borrowing money is a routine activity for most households – how else would most of us buy property, make home improvements or buy a new car? You should also have learned how to make good borrowing decisions and avoid the ones you would probably regret.

But if you do find you are having difficulties with your debts and are struggling to meet the repayments due, there are some key tips that will help you.

• First and foremost, open a dialogue with your lender. They will not want you to default on (i.e. fail to repay) the money you have borrowed. The financial services regulators also require lenders to provide support when borrowers get into difficulties
• Be prepared to seek help from the agencies here in the UK that provide free debt advice – for example Citizens Advice [Tip: hold Ctrl and click a link to open it in a new tab. (Hide tip)] and StepChange.
• Take charge of your overall finances by setting or reviewing your household budget. Some economies on non-essential spending could provide the scope to keep up with your loan repayments and avoid your credit score becoming impaired. Guidance on how to build and manage a household budget was provided in Session 2 on budgeting and taxation and is accessible via the MoneySavingExpert website.

Further help and guidance can be provided from the following sources. Open the links in a new tab or window and come back here when you’ve finished.

• Follow this link to learn more about how interest rates are set and at the key role played in the management of the economy by the Bank of England.
• If you want to know more about Experian’s credit scoring and credit reports visit MoneySavingExpert’s Credit Club.
• If interested, take a look at Equifax and TransUnion.
• If you want the latest news on the credit cards with the best 0% and credit transfer deals visit MoneySavingExpert.com.
• If you want to know more about the alternatives to expensive forms of borrowing, look at the Financial Conduct Authority (FCA) publication ‘Alternatives to High Cost Credit’.

You are now halfway through the course. The Open University would really appreciate your feedback and suggestions for future improvement in our optional end-of-course survey, which you will also have an opportunity to complete at the end of the course. Participation will be completely confidential and we will not pass on your details to others.

Get started with Session 4: Understanding mortgages.