Credit crunch making us smarter

The credit crunch is starting to have a positive effect on the loan and card applications and credit ratings of many Brits.

Rather than simply applying for a market-leading product which, invariably, is reserved for those with excellent credit ratings, Brits are getting smarter.

Last month price comparison site moneysupermarket.com had 371,000 loan and card applications done through its long-established Smart Search tool, compared to only 103,000 in December 2006.

Smart Search matches people to the best credit cards or loans depending on their circumstances.

Tim Moss, head of loans and debt at moneysupermarket.com, said: "This is very positive news for borrowers and lenders.

"The traditional scattergun approach of Brits applying for credit is being replaced with a lot more surgical precision now.

"The message is at last getting through that there's no point applying for cards and loans you won't get.

"Each time you have an application rejected, it has a negative effect on your credit rating and reduces your chances of being approved for the next product you apply for, or being offered a higher rate.

"Brits are at last realising that applying for the most appropriate card or loan in the first place is the best way to go.

"Lenders are also delighted because they know with Smart Search that applications are more likely to be appropriate ones, rather than ones they have to spend time studying and then rejecting."