A new market-leading loan has been launched by Hitachi, but it's not available for everyone.
The cheapest-ever personal loan has been launched by Hitachi, at a rate of 4.9%. But it's only available to borrowers with a perfect credit score.%VIRTUAL-SkimlinksPromo%
Loans of between £2,500 and £15,000 are available but only around 10% of customers will actually be accepted for a loan at 4.9% and most will actually get 5.4%.
Borrowers taking out this loan with Hitachi, the financial arm of the Japanese conglomerate, will have between six months and five years to pay the debt back.
However, the advertised rate for this loan is 5.4% which at least half of all customers must be offered. This rate is not market leading, and in fact comes after deals from Derbyshire Building Society and M&S Bank, which both offer 5%, and Clydesdale Bank, Sainsbury's Bank and Tesco Bank – all at 5.1%.
Personal loan competition
Across the personal loan market there has been a lot of action this year as competitiors try to cement their place at the top of the tables.
Hitachi's loan may undercut deals from other providers – but it's not going to be an option for most people.
Our comparison tables give a full view of the market and here I've listed the top five alternatives on the market when looking at loans between £7,500 and £15,000.
Alternative ways to borrow money
Headline rates on personal loans may look attractive but they will only be available for borrowers with good, or in some cases exceptional, credit scores.
There are other ways to borrow cash though and these all depend on your circumstances. You could opt for a higher interest rate, as even though it's not market-leading it still could be the lowest rate on offer to you.
For those in real financial trouble, the best thing to do is approach a charity such as StepChange. It provides free, confidential advice for those struggling and it can speak to lenders to try to arrange interest holidays as well as providing free debt management plans. It's not the only free debt charity though. Read Where to get free debt advice.
How to dispute your credit record
Hitachi launches market-leading personal loan at 4.9%
Don't wait until you need to apply for credit to view your credit record – do it now so you know where you stand and can deal with any disputes. When applying for credit, you give the lender permission to view your record, so it makes sense to view it yourself first.
You can access your record via any of the main credit agencies in the UK. By law, all the credit agencies are required to provide you with a one-off copy for just £2 so don't be hoodwinked into signing up to pay a monthly fee.
Your report shows what credit accounts you've had and whether you've made repayments on time and in full. According to Experian, items such as missed or late payments stay on your credit report for at least three years, while Court Judgments for non-payment of debts, Bankruptcies and Individual Voluntary Arrangements stick around for around six years.
Your credit report shows the current address at which you are registered to vote as well as details of other addresses you've been linked to in the last six years. Another section lists people you have a financial connection with, such as a joint mortgage. When you apply for credit, lenders are able to look at their credit history as their circumstances could affect your ability to repay what you owe.
Scrutinise your record to make sure there are no mistakes. Even a minor error such as an incorrect address or wrongly linked account could hinder your chances of being approved for credit so make sure all your details are correct and that all your borrowings are on record. If there is a discrepancy, contact the three main credit agencies to get it corrected.
A default notice is note that a lender puts on your credit file if you fall behind with your payments. It is a warning sign to future lenders about your reliability to repay credit and could mean that they will be less likely to lend to you or will increase the interest rate.
If the default notice is incorrect, perhaps because you have repaid the loan in full or did not take out the credit and suspect that you have fallen victim to fraud, you can apply to have a default notice removed. A default notices will only be removed if it is factually incorrect – not simply because you are embarrassed by it.
Start by writing to the agency asking it to either remove or change the entry that you think is wrong. It will investigate the matter and find out whether you have been the victim of ID theft or a bank's mistake.
Within 28 days from receipt of your letter the agency should tell you how the bank has responded. If the bank agrees to change the entry, they will authorise the agency to update their records. They should also send updates to any other credit reference agencies they use.
You can also contact your lender directly to query a mistake. If the lender agrees to the discrepancy, ask them to confirm this in writing on their letterhead and send a copy to the agency, asking them to update your file.
If you are unhappy with the response or would just like to explain a missed payment on your file you can send a Notice of Correction. This is a statement of up to 200 words that will be added to your file. Although lenders don't have to take this information into account, it at least gives you the chance to tell your side of the story.
Experian states that agencies will also help you escalate the dispute to a third party arbitrator if necessary, such as the Information Commissioner's Office.