The level of personal debt in the UK has sky-rocketed in recent years. According to the Department of Trade and Industry, people owe, on average, 50% more than they earn in a year – an all-time record. And a survey it commissioned shows that 25% of us find our debts a real burden.
Christmas over-spending doesn’t help – the Association of Payment Clearing Services estimates that the country spent £48.7 billion on Christmas 2005, an increase of 10.8% over 2004. So it’s hardly surprising that recent research for CreditExpert, the credit monitoring and identity protection service from Experian, found that 73% of us worry about repaying the expenses of the festive season.
If you are one of the millions who are really worried about how to manage your debts, read on. Make a New Year’s resolution to follow the advice in this simple guide – and enjoy a happier 2006.
What do you owe?
It’s easy to ignore how much you really owe – but facing up to this is the first step towards a better financial future. Try to compile a full list of your borrowings. Include:
- Your mortgage
- Any loans from banks and finance companies – for cars, furniture, home improvements, holidays and so on
- Loans from friends and relatives
- Any credit you have with companies that collect personally from your home
- Debts on credit and store cards
- Your overdraft
- Other borrowings – for example, against insurance policies
What are your priorities?
Identify which debts attract the highest interest. Could you consolidate them into a single loan at a lower rate (and it has to be lower over the long term to be a good move)? Or swap to a better deal?
A simple first step to getting the best offers is to understand your credit report. This is your personal history of the credit, loans and mortgages you have, your repayment record, details of any court judgments against you and other information such as whether you are on the electoral register at your current address.
Lenders use it when they decide whether to make you a credit offer and how much interest you should pay. If you have a tarnished credit history – such as missed payments – you are less likely to be given a good deal. Likewise, if your report shows that you have a large number of existing debts, new lenders may fear that you will not be able to repay them.
To see your credit report visit our CreditExpert partner page to take advantage of a 30-day free trial of the CreditExpert service and check your report for free.
