Borrowing when you're affected by cancer
Borrowing may seem inevitable if you’re struggling to pay your bills. But it’s important to explore all the possibilities first.
Main types of borrowing
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It’s important to explore all the possibilities listed in the previous pages first before you consider borrowing money.
Make sure you’re getting all the income you’re entitled to.
Use an emergency fund if you have one (money you’ve saved for an emergency, for example in a savings account).
Claim on insurance and pensions.
Budgeting and make savings if possible.
Borrowing to deal with existing debts you can’t repay is rarely a good idea.
Talk to a trained debt adviser first about options for dealing with your debts or credit commitments.
You can speak to a debt adviser at StepChange Debt Charity.
If you do borrow money, it makes sense to choose the cheapest type of borrowing.
See this table of the most common types of borrowing you could consider [PDF, 41.9 Kb], listed from the cheapest to the most expensive.
Whenever you borrow money, you should try to have a clear idea of how you’ll make the repayments. You could use our online budget planner to help you do this – visit finance.macmillan.org.uk/budget-calculator
Check what other options you have before borrowing.
Look for cheap ways to borrow.
Try not to use store cards, pay-day loans, door-to-door lending and unauthorised overdrafts.
Bear in mind that, with a secured loan, your home is at risk if you don’t keep up with payments.
Avoid illegal lenders (loan sharks). They charge excessive fees and typically use aggressive tactics if you cannot repay. You can report illegal lenders to government Illegal Money Lending Teams on 030 0555 2222 (England), 014 1287 6655 (Scotland) or 030 0123 3311 (Wales). In Northern Ireland, call the Trading Standards Consumerline on 030 0123 6262.
How cancer might affect borrowing
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Your health isn’t directly relevant when you are taking out a loan or credit card. But it can become a factor if you’re taking out insurance or if your credit score has been damaged because of the effects of illness. There is more information below about your credit score.
Insurance linked to a loan or credit card
Generally, you shouldn’t be asked any questions about your health when you borrow money, but you will be if you take out any related life insurance or health insurance. If you don’t take out insurance, you should be able to get the loan or credit card without having to give details of your health.
You may be given the impression that taking out insurance is a compulsory part of a loan deal, but this is rarely the case.
In particular, you normally don’t have to take out payment protection insurance (PPI) with a loan, however much the salesperson recommends that you do.
The right insurance can provide valuable protection for you, but you should be treated fairly by firms when you buy it. If you want this type of cover, you should shop around.
Our financial information includes more information about insurance.
Your credit score
Many lenders use credit scoring to work out the likelihood of you keeping up the repayments if they lend you money. If they decide you’re high-risk, they may refuse to lend to you or charge you a higher-than-average interest rate.
Your credit score depends on a variety of factors. These include how long you have lived in your current home, whether you own your home, whether you’re employed and how long you’ve been in your current job, your marital status, your income and whether you have a bank account and existing loans.
Your credit score doesn’t depend directly on your health. But if health problems mean you’ve had to stop work, your income is reduced or you’ve already borrowed a lot, your credit score may be lower.
Loans from your local authority or loans made through the benefit Universal Credit are not credit scored, so you may qualify if your income is low and you’re claiming certain state benefits.
There is more information about Universal Credit. Credit unions and community-based lending schemes are more likely to lend to people with a poor credit score than other loan providers.
As part of assessing your credit score, a lender may check the data held about you (called your credit file) at one or more of the three UK credit reference agencies.
These agencies hold publicly available information about you. This may include your name and address from the electoral register, and private information about how you have handled your previous or current loans and credit.
When you apply to borrow, you have the right to ask the lenderwhether they‘ve used a credit reference agency when assessing your application and, if so, which one. At any time, you can contact the credit reference agencies and ask to see your file for a fee of £2. Checking your file lets you see if there are any errors.
If you do discover any mistakes, the credit reference agency will tell you how to correct them. It’s likely that all three credit eference agencies hold a file about you, and the information ontained may be different.
To check your file at each one, contact Callcredit, Equifax and Experian.