Post-Christmas Money Management

They say Christmas comes earlier and earlier every year.  Well, now the actual day is only around the corner, here at CTACIC we decided right about now is the perfect time to start preparing your post-Christmas money management scheme. It can be all too easy to stick your head in the sand during the festive season and simply spend, spend, spend. However, if you are already in a sticky financial situation (or you think you will when January 1st comes around) ignoring your money is the last thing you should be doing.

Naturally, Christmas will be a little more indulgent in comparison to the other months of the year. But it’s important that you keep a level head in order to avoid a full-blow financial hangover. Thinking proactively about your finances and planning how you are going to meet your repayments come January will prove incredibly beneficial when the time arrives. So, here is our week-by-week guide to help you drag yourself out of post-Christmas debt.

Week One – Making a Start

Getting started is always the hard part, but once you’ve got your bearings about where you stand with your debt you can begin to make productive steps forward. You need to work out exactly how much you owe, who you owe to and when you have to pay it off by. It all sounds relatively simple – however drawing up a budget is likely to be the really difficult part. If you are looking at a figure of more than 20 per cent of your monthly earnings going towards debt repayment, you may have entered a serious level of debt. At this stage, cutbacks and changes need to be made and fast.

Scheduling when you are going to repay your debts is crucial. You need ensure high-priority debts are paid first in order to avoid the loss of your home or essential services. After those are out of the way, focus on the debts with the highest interest rates as these can grow quickly when you aren’t looking.

Week Two – Credit Cards

Your credit card may have been your best friend over the Christmas period, but come January your trusty partner may quickly turn into your worst enemy. Many people rely on their credit cards to see them through the expensive festive season. A lucky few will have found 0 per cent introductory deals, but many will not. For the majority steep interest rates will be slowly increasing your Christmas debt.

A balance transfer card may be an excellent way to get a handle on your credit cards. Often banks offer 0 per cent interest periods on transfer amount of for up to 29 months, in exchange for a transfer fee between 1 and 3 per cent. If your credit card debt really is too much to handle, a consolidating loan may be your best option. From here, you will have to figure out whether your credit card debts would be best paid off either via balance or transfer card.

If you have any store cards or payday loans it is imperative you pay these off and get rid of them immediately. These are both hugely expensive outgoings and your debt will only snowball if left for long periods of time. If you find yourself in what seems like an unmanageable credit card debt situation, you can always seek free debt advice from CTACIC.

Week Three – Outgoing Cutbacks

By week three you should be looking at your outgoings to ensure you are not paying out extra cash for no real reason. Keeping a keen eye on your spending can help you to save money not just in January either, so when better than the New Year to implement a money saving ethic to your finances.

Simple changes to your routine can be made to your routing to make outgoing cutbacks. Making sure your utility bills are being paid by direct debit will cut your bills drastically. Also keeping on top of your energy bills by regularly reporting meter reading to supplier will provide with you a more accurate bill and help you to avoid one-off bill errors. If you feel that you are paying above and beyond what you use, consider switching in order to save money.

Living in your overdraft is a habit best given up in order to adopt a better finance focused attitude. You may be being hit by high interest rates and big bank charges for straying over your pre-agreed overdraft limits. This issue needs to stop as soon as possible, so switching to a current account may gain you a much lower overdraft rate.

Even your insurance policies could be trickling away your cash behind your back. Finding cheaper car cover, contents insurance or mortgage protection could save you huge amounts of cash in total.

Week Four – Mortgage & Rent

If you are the current owner of a mortgage, this is likely to be your biggest expense this month, so ensuring you have the best deal could really come in handy. Cast an eye over your mortgage rate and conditions to find out what rate you are on, whether it is fixed or a tracker rate deal, or your lender’s standard variable rate. You also need double check is there are any early repayment charges you may face. If your mortgage is really weighing you down financially, you may need to consider re-mortgaging.

For those who rent however, one of the most efficient ways to pay down debt would be to move to a cheaper home. If you have the opportunity to move to a cheaper or smaller property, it may be worth taking the hit of living somewhere else in order to pay off your Christmas debts quicker. You should at least set up a direct debt so they you never have to pay a late payment for not paying your rent on time.

If you are unsure about cutting your post-Christmas debts and need professional advice then call us. You can receive free advice from our personable and friendly team, who will guide you towards the best financial solutions.

Christmas Borrowing is Not Helpful or Worthwhile

Getting prepared for Christmas is as exciting as it is hectic and requires methodical organisation in order to be ready when your family gather together. With children jumping with joy at the prospect of Santa making a quick visit there can be a heavy financial burden on millions of Brits. Christmas, for all its commercial advertising, is all about spending valuable time with your families and enjoying each other’s company with a selection of seasonal food and fun activities. However, studies suggest a large number of families worsen their debts around this time.

Damning figures released by Money Advice Service research conveyed Christmas’ dangers in causing overspending because of the immense anticipation towards this uplifting event. This study revealed that a staggering 1.4 million British citizens will take out payday loans to make the time of year special for companies benefitting from such hyper-commercialisation. While this may look a prosperous short-term idea, it will result in damaging financial implications further down the line. It is safer to err on the side of caution when buying Christmas goods if you are in a troubling financial situation. Buying an extra electrical appliance will be gratefully received on Christmas Day, but could seem like an unnecessary gift if you are struggling to make regular payments well into the New Year.

Christmas in the UK is predicted to cost a jaw-dropping £26 billion in 2104 – an increase of £2 billion from a year ago. Therefore, it is not surprising that an increase in debts from payday lenders has arisen. Covering costs in December can place even more strain on already tight finances and the solution is not borrowing cash with rapidly rising interest rates. This is where Council Tax Advisors can be of assistance. We give free and impartial advice for anyone who is anxious about combining paying their bills with paying for essential items at Christmas time.

It is important not to lose sight of your council tax payment plan while you plan what to purchase in preparation for December’s big event. There is no need to worsen the current state of your financial affairs believing payday companies are the answer when their representatives promote short-term loans. Unlike these misleading companies, at Council Tax Advisors we take some responsibility for the advice we give our clients. We specialise in organising debt repayments and payment plans with bailiffs and councils on your behalf. Affordable solutions are reached, ensuring you have a huge weight taken off your shoulders this Christmas.

The festive season should be a relaxing time, rather than fretting over whether or not you should have trusted a payday loan company. It is highly likely that the answer will be a resounding no.  Contrastingly, we offer a very reliable service at Council Tax Advisors without being motivated by profit. We were formed on the back of our experiences will bailiffs so are in tune with the pressures you are going through. That is how we are able to give you sustainable long-term payment solutions.

The Threat of Bailiffs and Enforcement Agents over Christmas

Nobody feels positive about the prospect of bailiffs or enforcement agents turning up at their front door and they can undoubtedly ruin festive cheer by knocking on Christmas Day.

Last Christmas this was the case in Birmingham as debt collectors wrongly went to properties where residents owed money. Despite the fact that those in debt may feel helpless and bailiffs are in control, it is important to realise their limitations. Firstly, bailiffs are prohibited from coming round on Christmas Day, Good Friday and Sundays in most situations. If you debt is because of unpaid rent, then bailiffs are banned from visiting your property between sunset and sunrise and on Sundays.

A government voluntary code suggests bailiffs and enforcement officers should only come between 6am and 9pm. Unfortunately, this is not enforceable by law, but it is helpful to be aware of recommended codes of practice from The National Standards for Enforcement Agents. An enforcement agent or bailiff is someone who the council has given permission to visit your home so they can collect owed debts, including when residents are not up-to-date with their council tax payments.

Christmas is very costly for families and is becoming increasingly hard to pay for while the cost of living continues to get more expensive. In a majority of cases, bailiffs are only allowed to enter your property peacefully once they have received your permission. You should contemplate this approval carefully, as bailiffs are permitted to re-enter your home once they have been given the go ahead. When they return there is nothing to prevent them forcing entry into your home if you refuse to let them back in.

 

You must get seven days notice of an enforcement agents’ arrival which helps in easing fears for those in debt. Once you are notified, make sure you contact us here at Council Tax Advisors so we can assist you in creating an affordable repayment plan. Our experts are so effective, because in many cases they have been in your difficult position before.

We set up this not-for-profit organisation after our own experiences with bailiffs. Our helpful team provide free and impartial advice for anyone in debt as a result of council tax charges or any other kind of debt. We are often able to stop bailiffs from entering your home by arranging effective solutions for a variety of our clients. This is very realistic because of our discussions with councils and enforcement officers which helps resolve your financial problems.

Bailiffs and enforcement agents are essentially the same thing. Both like to feel as though they are in command of your debt problems as some visit your home on Christmas Day along with other occasions when prohibited by the government. At Council Tax Advisors we ensure you receive the adequate support needed to solve debt problems and provide our clients with knowledge of their rights. We help you regain control of your finances by communicating with councils and bailiffs so you can enjoy your Christmas without the anxiety of having strangers invade your property.

Sale-and-Rent Back Schemes: The Basics

If your debt situation is continuing to spiral out of control, you may be tempted by a sale-and-rent back scheme. This is where you sell your home at a discounted price and, in return, you will stay living there as a rent-paying tenant for a fixed term. This will free up money to allow you to clear your mortgage or other debts. The thought of living debt free is naturally very appealing to those who are suffering with money problems. However, you will face new risks by investing in a sale-and-rent back scheme.

The Important Facts

It is crucial to do all of the necessary research before investing in a sale-and-rent back scheme. Firms should provide you with a full list on information before participating. Here are a few of the main facts that you will need to obtain from the provider:

  • The firm must provide you with the market value of the property following an independent valuation by an evaluator with a duty of care to you
  • The price the firm will pay for the property
  • The fixed term of your tenancy agreement, which must be at least five years
  • The rent payable under the agreement
  • When the rent can be increased
  • What happens if you fall behind on rent

 

Risks of Sale-and-Rent Back Schemes

When you have received a written offer to buy your home, you’ll have 14 days to consider it before the firm can contact you again. This is a crucial time to consider the risks of a sale-and-rent back scheme.

  • You will no longer own your home
  • Your rent could go up both during and after the fixed term of your tenancy
  • You may still have to leave your home after the fixed term of your tenancy agreement
  • You could still be evicted during the fixed term is you break the rules of your tenancy agreement, for example if you fall behind with your rental payments.
  • If the person or company buying your home gets into financial difficulties, the property could be repossessed and you may have to leave.
  • The fact these schemes involve selling your home at a discount means you will inevitable get less money than you would have sold it for on the open market.
  • Selling your home at a discounted price may affect your eligibility for bankruptcy or other forms of insolvency.

 

Sale-and-Rent Back Alternatives

These schemes should only be considered as a last resort. Make sure that you have explored all of your other options first. Speaking to your mortgage lender may prove helpful. They may be able to help you by making an arrangement to repay your mortgage arrears. You could consider selling your home on the open market and finding somewhere else to rent.

If your reason for considering sale-and-rent back is due to other forms of debt then getting free and independent debt advice to help you deal with your lenders. CTA CIC is a debt advice service that will explore all of the possible options with you, ensuring you make the right decision when it comes to sale-and-rent back. Call today and speak to one of our friendly experts.

Mansion tax divides opinion among politicians and celebrities

With a general election under six months away, the battle to win Westminster seats and the keys to Downing Street have intensified recently. One way Labour leader Ed Miliband has attempted to woo voters is by proposing a mansion tax which will raise funding for the NHS. This policy is a fundamental part of Labour’s election campaign after losing in 2010 – ending a 13-year stretch in government. Their plan to tax the rich will be divided into bands depending on property value, similar to council tax billing.

Should Labour win the election on May 7 homeowners of properties valued at £2 million and above will have to pay an additional housing tax. According to shadow chancellor Ed Balls, homes will be put into four bands with those valued between £2 million and £5 million having the lowest contributions. People in this proposed lowest band would pay £250 extra a month, equating to a yearly increase of £3,000. This extra charge could create a new demographic of financial struggles to emerge. Labour are already on the defensive, claiming that those earning less than £42,000 a year in high-value properties will be able to defer the mansion tax until there is a new homeowner.

Those with a £100 million-plus property would be charged the most in an effort to save £1.2 billion for the NHS as pledged by Labour. This comes after it was revealed that waiting times for cancer treatment doubled over the last 12 months and were the longest for six years.  For this reason, Labour want to increase NHS funding as well as increasing the number of doctors, nurses, midwives and homecare workers.  Preservation of public sector workers is likely to be a huge issue during the general election. This would be likely to cause further council tax increases for all, adversely affecting those on lower incomes.

The mansion tax is controversial with many believing it will be ineffective because of loopholes around payment. London Mayor Boris Johnson has criticised mansion tax for being unfair on hard-working families and thinks it is unfair on England’s capital. Experts have estimated 80 per cent of homes affected by the tax are in London and the south-east.  Estate agents Savills warned that people have been discouraged from buying £2 million-plus properties across London because of the threat of mansion tax being introduced. Former England footballer Sol Campbell is so incensed by the policy he has considered joining the Conservatives and feels it could make Britain poorer as wealthy individuals choose to leave.

In contrast to Campbell and Johnson, the Liberal Democrats support mansion tax. They believe council tax is regressive and the idea of taxing the wealthy is much fairer because ordinary people will not have to pay it. According to Labour and the Liberal Democrats, 99.5 per cent of homes will be unaffected by mansion tax. Miliband wants investors from overseas to be charged more for living in their second homes.

Labour’s policy has already been divisive within the House of Commons and is certain to provoke passionate arguments during the televised debates scheduled in April.  They say this will improve patient care by guaranteeing cancer patients a maximum of a seven-day wait for tests and results by 2020. People who struggle to distinguish between the two main parties can see a clear difference between Labour and Conservative politicians with months of canvassing ahead.

The implementation of mansion tax could lead to a new group in difficulty with housing payments as it is based on property value rather than the homeowner’s salary. Therefore, it could cause similar problems to council tax bills and in turn create a whole new class of financial difficulty.

Council Tax Advisors provide free and impartial advice for those in debt from council tax bills. People distressed by financial difficulties are supported by advisors who organise payment plans with councils and bailiff firms.  CTA CIC offer a variety of debt solutions; combating fears of aggressive bailiffs approaching your home.  Their help caused a bailiff’s licence to be revoked. This invaluable support allows clients to regain their happiness without worrying about more warnings and intimidation from bailiffs.

Seeking Fundamental Advice to Help You Unload the Burden of Debt

Reports of the debt crisis engulfing the UK are never far from our television screens or newspapers. It’s hard to argue that the global economic crisis and the recessions that affected countless economies throughout the world subsequently made it tougher for people financially. In the wake of the crisis, jobs became harder to keep and even harder to come by and wages stagnated, while the cost of living has continued to rise. In a desperate attempt to regain control, some have resorted to pay day loans in order to supplement ever-dwindling incomes, which simply serve to increase personal debt levels.

But has the level of people in debt in the UK been as accurately reported as we have been led to believe? While the total value of Britain’s personal debt now stands at a staggering £1.5 trillion, figures calculated by insolvency trade body, R3, have revealed that less than half of us are shouldering the burden of this colossal sum. In fact, they have reported that just 47 per cent of British adults are in debt. A frightening statistic in itself, it’s compounded by the finding that just a third of them, around 15 per cent of all UK adults, have the biggest debt burden by owing money to five or more organisations.

R3 has rightly pointed to the concentration of the UK’s personal debt among a relatively small group of adults as a huge cause of concern. In response to the research, the chair of R3’s personal insolvency committee, Stuart Frith, has said: ‘The UK’s personal debt burden is eye-watering, but it’s especially worrying to see how unevenly spread this burden is.’

While encouraged at the number of people found to be currently debt-free, he added that there are a high number of people on the edge financially, where it would not take much for them to be plunged into the red. Such a view is given credence by new research from the Debt Resolution Forum (DRF), which has revealed a link between rising living costs and a decline in the ability of UK households to combat debt. Attempts by debtors to find a solution to their financial difficulties is also being met with tougher measures by creditors, warns the DRF. This claim appears to have substance when you consider the recent revelations surrounding some payday lenders and high street banks that were found to have been using false or misleading solicitors’ letters to harass people in arrears.

While the research might be seen as scare-mongering in some quarters, it’s obvious that personal debt is still a huge problem for a lot of people. Ok, so the number of adults in problem debt might be less than many thought, but those in arrears or in danger of joining this unwelcome club is still far too high and shows that personal action needs to be taken.  Fear of intimidatory tactics or receiving demands for payment from creditors should in no way stop people with debt problems from seeking help.  If you’re in financial difficulty, getting free and independent advice, such as that offered by Council Tax Advisors, will help rather than hinder your efforts to free yourself from problem debt – every time.

Spreading the Cost of Christmas

Most Brits love the festive season for all its warmth and twinkly wonder. Most don’t have to work, there’s lots of food and family and general merriment is all around. However, if you’re in debt, the Christmas period can be like a black cloud over your head. As December draws in, you may be panicking about how you’re going to pay for all your Christmas presents, decorations and food. If you’re in a situation where you’re not even sure if you can cover the cost of your rent and bills for the month, Christmas may not feel like the season of joy.

However, your financial concerns don’t have to be the nail in the coffin for your Christmas. With a proactive attitude and savvy spending, avoiding huge December debts is possible. For many, even the mention of Christmas before December is enough to make the blood boil. Nevertheless, everyone knows that the early bird catches the worm, and this is certainly true when it comes to grabbing the best Christmas deals and spreading the overall cost of the festive season.

For those who want to spend a controlled amount every month, October is a great time to start your Christmas spending. This is the ideal time to buy your festive items in bulk such as decorations, crackers, and food that can be easily frozen. Items get considerably marked up as early as November, so by getting ahead of the game you are sure to save yourself some cash. If you need one, this is also a fantastic time to purchase your artificial Christmas tree. Sellers usually offer large discounts in the months building up to December in order to get the holiday ball rolling. By late November to December you can rest assured that Christmas trees will have almost doubled in price.

A problem for many is not being sure what your loved ones want for Christmas yet. They may not have even decided themselves! Some hinting or outright asking might be necessary here in order to get your present shopping on the go. If that isn’t possible then making an educated guess may be for the best. Buying a few of the bigger presents in October or early November will not only spread out the cost but will also guarantee that the gifts you want are in stock. Getting your Christmas present shopping out of the way early will mean you are stocked up, wrapped up and ready for the big day by mid-November.

If you’ve bought your presents based on a guess and you later realise you made the wrong decision, in most cases you will be able to return or exchange. Although holiday shoppers need to be aware that some returns policies run out after a month. So if you’ve bought your presents in October and you need to return them in December, then you may be out of luck. Many retailers do add deadlines in order to catch you out but some will extend their returns deadlines over the Christmas period. If you’ve bought presents in October and you attempt to return them after the New Year, you may be left out of pocket. If you’re not sure what your loved ones want, then playing it safe and just asking them outright may be the best bet. If not, purchasing vouchers is always a broad alternative that pleases most people.

Starting the Christmas spend early will definitely ease the pressures of the festive build-up in December. Christmas can be stressful enough with the endless cooking and visiting distant relatives. Having money troubles on top of everything else can truly ruin your festive season. Be smart, be organised and be proactive, and Christmas will come and go without you breaking out in a cold sweat over your credit card bills.

The Supermarket Save

So, you’ve paid your mortgage or rent and utility bills this month, next stop – the supermarket. You may or may not be surprised to hear that supermarket shopping actually accounts for a massive 21.5% of everything we spend. That’s an average of £75.60 per household every week.

Many supermarkets may attract your attention by declaring a price war on one another. Supermarket adverts constantly highlight price comparisons on all of your daily essentials. Unfortunately, rising food prices globally means your shopping basket is still likely to cost more than it did a year ago.

However, there are still many ways you can cut the costs of your trolley. It’s not all about sacrificing your favourite treats either. Here are five top ways to save on your supermarket spend:

Plan what you need and cut down waste

Statistics show that Brits throw away £9 worth of food a week, either from cooking too much or not eating fresh fruit and veg or baked goods before they go off. Over a whole year the total runs up to £468.

You should never underestimate the power of the list. Plan what you need and when you are going to use it. Not only will you cut down on how much you waste, but you’ll also be less likely to make impulse buys.

Having a budget also helps you to keep track on exactly what you can afford every week so you aren’t tempted to overspend. If you’re really organised you could even put the cash aside into a jar. Using cash instead of card will stop you from going over your budget.

Don’t be loyal

You may be tempted to purchase your favourite brands, just because you always have. In reality you could be saving a huge amount of money just by purchasing the cheaper version. Many of the supermarket’s own items are actually made by the same people who produce the big brand equivalent. Give them a try and see if you notice a difference.

Location depending, you could also save by switching where you shop. If you have time you could even try splitting your weekly shop between two different companies to save even more. Try to buy similar items and amounts and then compare your receipts.

Little discounts add up

Those little vouchers for 30p off which usually go out of date in your wallet actually have the potential to go a long way. There’s no point in buying specifically because you’ve been given 30p off. However, saving your coupons could total up to a big discount on one of your receipts in the future.

Take advantage of any loyalty card scheme on offer. You could get points or freebies as part of your normal shop. Still, don’t let a loyalty scheme sway you if there are cheaper shops nearby as lower prices could outweigh these benefits.

 

Size does matter

As packaging gets bigger, contents aren’t following suit. Shrinkage techniques are used by brands in an attempt to keep the prices high but make the actual products smaller. Even items sat next to each other on the shelf can look the same size, but could actually be 10% different – or more – due to the disguise of bulky packaging.

Big multi-packs may not actually be better value either. The best way to compare different sized products is to look for a price per unit on the shelf. They don’t always make it easy for us to tell, you’ve got a better chance of seeing what the product really costs by reading the small print.

Don’t get distracted by deals

It’s a great deal, but you don’t need or want it, so don’t buy it! Just because something looks like a great bargain, doesn’t mean you should jump straight in and buy it. Time it right and there are often fantastic things to be found in the reduced aisles. Only buy things you can eat and freeze before they go off.

Great ‘deals’ might not even be what they seem either. Supermarkets often use big signs on shelves with the price or red stickers on packs that imply it’s cheaper than normal. In all actuality, this is just how much the product costs. Some multi-buy deals have been found to work out cheaper to buy separately. Make sure you really check before you buy.

UK foodbanks piloting additional debt advisory service

This winter more people than ever will be forced to choose between paying to keep warm and having enough to eat. This is the unfortunate and tragic legacy of the debt crisis the UK finds itself in. The number of calls being taken by debt relief charities has reached record levels and foodbanks are offering a valuable food donation service to an increasing number of people in severe financial difficulty.

Such has been the increase in the number of people being referred to foodbanks that a trial scheme is due to start this month that will see clients offered debt and money advice in addition to food parcels at selected foodbanks. The Trussell Trust, which runs more than 420 foodbanks across the UK, has high hopes for the scheme. They believe it could revolutionise the way it works, with its foodbanks partnering with local authorities along with debt and money-management charities to provide instant financial advice to clients in the most extreme debt situations.

Will Mansell, project manager at Stroud District Foodbank, one of those selected to participate in the pilot project, welcomed the chance to get involved and believes there is long-term potential for debt and money management charity involvement at foodbanks.

The scheme, which is being part-funded by a six-figure personal donation from the man behind Moneysavingexpert.com, Martin Lewis, could not be coming at a better time. According to new research, more than one in ten UK families has resorted to a pay day loan to make ends meet in the last year. During the same period roughly a quarter of UK families have been left with the choice of falling into debt or not being able to provide basic necessities for their loved ones.

The cycle of debt that awaits those taking out pay day loans for a quick financial fix is very much something that the scheme wants to get across. David McAuley, the Trussell Trust’s chief executive, said: “By introducing a ‘financial triage’ service in foodbanks, where clients are able to connect with free financial and debt advice, people will be given professional help to manage tight finances, avoid pay day lenders and structure debt to prevent the situation from getting worse.”

The idea of combining debt advice with the service you regularly expect from foodbanks is a commendable one. Not only will it provide valuable money management guidance to those in financial difficulty, but its long-term availability will give people another reason to visit foodbanks besides sustenance and hopefully help to remove the stigma of receiving food charity.

Of course, free and independent debt advice is available right now at Council Tax Advisors. We are on hand to provide assistance with a whole range of debt problems, so that you can begin the process of achieving long-term debt relief. Visit our website for more information and contact one of our friendly and knowledgeable experts today to see how we can help.

Clean Up Your Credit Score

For the average UK family, household bills cost around £1,170 in comparison to households with a healthy credit score. Your poor credit rating could slowly be deteriorating your overall financial health, and you may not even realise. Credit records provide information about how you have managed your credit and borrowing in the past. Lenders will then use this information when deciding whether to risk lending you money, and how much interest to charge.

If you have a poor credit rating, then this doesn’t just affect whether you can get a mortgage, loan or credit card. A bad credit record could also mean you miss out on the cheapest deals for gas, electricity, mobile phones and broadband. Providers will often check your credit rating before doing business with you. If you have a low score, they may charge a higher tariff just in case you don’t pay your bills.

It’s a vicious cycle, but families with poor credit scores face paying on average £138 more for their energy bills, £115 more for broadband and £43 more on mobile phones, according to research. This may be cash that you really cannot afford to lose.

Even buying necessary items or appliances like a car or a washing machine could become more expensive. Your bad credit score will mean you are likely to pay a higher interest rate when taking out a car loan or getting finance for household appliances. This will add thousands to the overall cost and inevitably worsen your financial situation.

If you feel like your credit score is spiralling out of control, it may be time for a credit score clean up. There are a number of manageable steps you can take to improve your credit rating. So, if you’re trying to improve your financial health, then here is how you can make a positive start:

1. Always make sure you are on the electoral register.

2. Pay your bills on time – we can’t emphasise this enough. Whether it’s your mortgage payments or your energy bills, make sure you have set up direct debits so you avoid paying late or missing payments.

3. Don’t ignore your credit record, make sure you check it and correct any mistakes. This includes simple factual mistakes like old addresses. You can receive a copy of your statutory credit record for £2 each from credit agencies, Experian, Equifax and Callcredit.

4. Don’t apply for lots of forms of credit at the same time, or within the same year.

5. Don’t max out your borrowing – aim to borrow less than 75% of your limit. For example, if your credit card limit is £500, try not to spend more than £375 without paying it off.

6. Pay down debts where possible, so your credit report doesn’t show large amounts of borrowing.

7. Close down old credit card accounts and cancel old direct debits. Companies will look at how much credit is available to you, not just how much you are currently borrowing.

8. Break any money connections with ex-partners, so you no longer share joint accounts or joint loans.

9. If you don’t have a credit history, why not consider taking card or store cards and show you can spend manageable amounts and pay them off in full and on time.

10. If you have previously had a County Court Judgement and it has now been settled, always make sure the settlement has been recorded on your credit file. You can also place a Notice of Correction explaining missed payments due to illness or unemployment.

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