Finance Blogger UK | UK Finance News

Debt, shopping and IVAs

admin — Wed, 15 Sep 2010 14:11:52 +0000

We’re a nation of shopaholics, according to uSwitch.com. The site reckons that 7 million people in the country are ‘in the grips of shopaholicism’, picking up debt in the shops buying things they might not even need.

People always point to spending figures and high high-street sales as a sign that the economy’s doing well as we hope for a ‘consumer-led recovery’. However, that’s not necessarily the case. After all, if people are spending money they’ve borrowed, that’s not a good thing if they’re borrowing more than they can afford to repay – it means those same people will have less to spend in the future, so in the long run it’s not good for the economy.

So uSwitch estimates that they’re carrying a personal shopping debt of over £3,300 on average. If they can afford it, that’s no problem. If they can’t, they really need to do something about it.

One thing they could do, if they can’t afford their debt payments anymore, is think about entering a debt solution like an IVA – and Individual Voluntary Arrangement. An IVA is a kind of insolvency that lets them repay what they can of their unsecured debts (over a five-year period, in most IVAs) and their creditors will write off the remainder at the end of the IVA if they’re able to do that.

It’s no easy way out of debt, though, and they’ll have to think through the consequences carefully before they commit themselves. It’ll damage their credit rating. It’ll require them to free up equity from any property they own. It’ll limit their ability to get credit.

Plus, there’s not much point in someone entering an IVA if they’re going to keep up their old bad habits, like spending and borrowing too much.

Having said that, if someone realises they’ve run up too much debt and they can’t repay it like they said they would, an IVA could be the best option they have available to them. If they change their shopping habits and stick to the terms of the IVA, an IVA could be the best way for them to get out of debt.

what your credit score can do for you

admin — Mon, 28 Sep 2009 21:21:21 +0000

When people talk about credit scores, the tone of the conversation normally takes on a negative aspect. It seems that people tend to be focused on the ??bad?? side of the system. They cannot be blamed, however, as you can??t even begin to count all the horror stories about credit scores. Then again, it is always good to look at things in a positive light. So in this post let??s take a peek into the other side and talk about what your credit score can do for you.

Good credit scores ?? not excellent, mind you ?? can save you a lot of money. As we all know, credit scores always come up when you are taking out a loan. With a credit score of say, 700, you will have about 5% to 8% savings as compared to those with fair credit scores of 600 to 650. We are talking about FICO scores, by the way. These savings come in the form of interest rates applied and the monthly payments as well.

Another area where your credit score will make a huge difference is insurance. Everyone knows how much of a headache you can get from your insurance premiums. The thing is, with a good credit score, you can make a lot of savings regarding your insurance premiums.

These may seem obvious but it is good to be reminded every now and then. With these benefits in mind, you may be motivated a little bit more to improve or at least maintain your credit score.

secured personal loans for bad credit

admin — Mon, 28 Sep 2009 21:21:21 +0000

In the last post I talked about unsecured bad credit loans. There is another option for those of you who are saddled with a bad credit score. You can actually use secured personal loans to climb your way back up the credit score ladder. It is true, it doesn’t seem to be such a good idea to take out another loan when you are already in bad shape financially. Yet one way to improve your credit score is to show that you are creditworthy and that you can pay your debts off. Of course, this will only work if you are truly capable of paying off your debt. If not, then it IS a bad idea. When taking out a loan, the first question usually raised is “How is your credit score?” Those five words invokes fear or depression or whatever negative feeling in the hearts of those with lower than average credit scores. More often than not, their loan applications are denied. With secured personal loans for bad credit, though, you can actually get your loan approved. So what’s the catch? Just as with unsecured bad credit loans, you get high interest rates for secured personal bad credit loans. Still, if you compare these two types of loans, you get better interest rates with the secured loan. Of course, you’d need collateral for this and if you don’t pay up, then there goes your house, or car, or whatever you used as collateral. Once again, the point is that this loan can be a tool for you to get back on your feet – used properly, that is.

getting loans with a bad credit score

admin — Mon, 28 Sep 2009 21:21:21 +0000

Your first thoughts may be ??Is this possible??? Anyone who has taken even a brief look into the market would know that yes, it is indeed possible to take out a loan even with a bad credit score. Of course, that doesn??t mean that you have to be content with a bad credit score. It??s only a provision for those who find themselves in that unfortunate situation and are in need of an infusion of cash for whatever reason. So how do you go about securing a loan with bad credit? If you do a quick search on the Internet, you will find numerous online lenders offering unsecured loans for those with bad credit. It sounds too good to be true, doesn??t it? Bad credit and unsecured loan ?? those two expressions just don??t seem realistic. Yet they exist. Then of course, there is a catch. First off, the fact that you won??t have to put up any collateral means that the interest rates applied will be quite high. More so, since you have bad credit to start with, the interest rates will really go up a notch, or even more. You have to do extensive research before committing yourself to any bad credit unsecured loan, though. Not all online lenders are reliable. Make sure that the one that you do choose is authorized and has a good reputation. Ask different lenders for quotes ?? most often this is offered for free. Then look into their terms and conditions. Bear in mind, what you want to do is to improve your credit score in the long run. So use your money wisely.

last installment for credit score killers

admin — Mon, 28 Sep 2009 21:21:21 +0000

All right, here is the last post (for now) that will tackle practices that kill credit scores. In the last post, we talked about the importance of continuity when it comes to your place of residence and your job. Here are several more things that are factored in when coming up with an individual??s credit score. As usual, they are to be avoided if you want to have a good credit score. 1. Not being on the electoral roll. In the UK, this is a very important thing when it comes to credit scores. It is not enough to just be on the electoral roll, though. The address you have specified on the electoral roll must be the same address you specify in your loan application. This has something to do with stability once again. As you have perhaps surmised by now, lenders really have this thing going for anything that gives you, the borrower, a sense of stability. 2. No bank account. This definitely makes sense. As many loans these days are processed electronically, the money is usually transferred directly into your bank account. Having no bank account is definitely a minus on your part. Your credit score will take the hit for this. However, your credit score is also affected by having only new bank accounts. Here comes the stability factor once again. The point is, the longer you stick with one bank, the more it favors you. So don??t go about closing your old bank accounts for new ones. That??s it for now. Till the next post!

yet more ways to pull that credit score down

admin — Mon, 28 Sep 2009 21:21:21 +0000

I just can??t seem to get enough of these little things that pull one??s credit score down. Then again, I believe the old saying that goes forewarned is forearmed. There have been too many stories in which a person goes and applies for a loan only to be rejected without him understanding the reason behind it. Most of the time it is the credit score that is to be blamed. Before that happens, I??d rather know what things lower my credit score so that I can do something about it before I encounter a problem. Here are more credit score killers for you to think about: 1. Living at your current address for less than 3 years. This may sound stupid and unfair but it is nevertheless true. Lending institutions have this notion that the longer you stay at the same address, the more stable and reliable you are. They translate this into the ability to pay off your obligations. It does make sense when you think about it. So if I were you, avoid jumping from one apartment or house to another. 2. A New Job Another silly-sounding factor but lending institutions justify this as they would justify the current address criterion. The important thing to remember here is that lenders want to see continuity ?? stability. If you are new to your job, that doesn??t necessarily mean that your points are shaved off. The worst case scenario is having 3 jobs in the last 3 years, for example. Then that definitely will raise the red flags. Time and space forces me to pause here but have no fear, we will look into a couple more items for the next post.

more ways to kill your credit score

admin — Mon, 28 Sep 2009 21:21:21 +0000

Some posts ago I listed three ways to kill your credit score. I believe that having the right information can help you avoid all sorts of mishaps and your finances are no different. So here are more ways to kill your credit score. Just in case you are missing the point, these are things that should be avoided at all costs! 1. Failure to report relevant changes in name, address, and other information. This may seem petty but it is in fact, quite important. If you change your billing address and you forget to inform all your creditors, misplaced bills will result in late payments, which we all know to be the number 1 credit score killer. As for name changes, it can cause confusion and you may even be getting someone else??s credit score because of this! 2. ??Lending?? your credit. One very common example of this practice is co-signing a loan, or serving as a guarantor for another person. While it may seem a kind deed, it does nothing for your credit score. This is even more important when the person does not have a really good credit standing. Of course, there may be other factors to consider when deciding whether or not to guarantee a loan but the aim of this post is to inform you of its consequences on your credit score. 3. Taking out cash advances on your credit card. Here comes the credit card again! It never fails to make the list of credit score killers. Cash advances may be very handy but they have very high interest fees and other charges to boot.

your credit score and insurance

admin — Mon, 28 Sep 2009 21:21:21 +0000

In the last post I talked about how your credit score can be used by potential and existing employers. As if this were not bad enough, there is another sector that is starting to use credit scores to determine the features of their services. Insurance ?? whether it be personal, car, or home ?? has always been a complicated issue. Insurance premiums and all those things have long been deemed a necessary evil by many people. Now, we may have an additional thing to worry about. It is starting in the US, and it may only be a matter of time that UK insurance companies follow suit. Yes, some states now allow insurance companies to use credit scores to determine the price of car and home insurance. The idea is simple ?? the better your credit score, the more discount you can get on your insurance premiums. For people with a below average credit score, you??d just have to grin and bear the high insurance costs. The justification for this practice is very much the same as the reason used by companies when hiring people and by lending institutions. The premise is that a person with a good credit score is more responsible. Sounds good doesn??t it? Yet for the life of me, I can??t see the direct connection between my credit score and the chances that I would let my house burn down or crash my car. I don??t think it??s fair that people with high credit scores will get insurance premiums twice, thrice, or even six times lower than those with not so good credit scores.

how bad credit can affect your career

admin — Mon, 28 Sep 2009 21:21:21 +0000

Bad credit has gotten all sorts of negative raps but this one might beat them all. Did you know that bad credit can actually affect your chances of getting a job? More so, a bad credit score can also have an effect on whether you keep your job or not.
More and more, potential employers are making use of credit reports in the process of taking on new employees. In addition to these, companies are also making use of credit reports when they evaluate existing employees for promotion, reassignment, or retention. Though this practice originates from the US, it is becoming increasingly used in the UK. In the US, companies are obliged to inform potential and existing employees of their intent to look through their credit report. In fact, they are required to get the person??s permission. At present, though, in the UK, this is not the case.
What is the idea behind credit reports and job searching/retention? Many employers use your credit report as a measure of your trustworthiness and your commitment to obligations. This in itself makes sense. However, if you are not informed of the reasons you are rejected for a job or a promotion, then the whole idea is unfair. We all know that your credit score is not always within your control.
That is why it is smart to always keep tabs on your credit report. Make sure that there are no errors. More so, make sure that you control what you can ?? keep a tight rein on your spending and make your payments on time. It is also a smart move to ask potential or existing employers the reasons for their actions. If it??s your credit score, then maybe you can do something about it.

how to kill your credit score

admin — Mon, 28 Sep 2009 21:21:21 +0000

Now who in the world would want to kill his credit score? The answer is, of course, absolutely no one. However, that doesn??t mean that knowing what it takes to kill a credit score is useless. In fact, it??s the opposite. Knowing exactly what kills your credit score will help you avoid these pitfalls. 1. Late payments. This is the number 1 credit score killer. Everyone knows that, yet most everyone still makes late payments! If you really want to keep your credit report clean, make every payment on time. Whether it is a personal loan or a credit card purchase, just make sure you are aware of your due date and pay it off on or before that date. 2. Maxed out credit cards. The usual litany is that ??I just can??t help it, this gadget or that gadget was simple irresistible.?? Even if it means maxing out one??s credit limit, some people just can??t help themselves. Well here??s news for you ?? maxed out credit cards are a telltale sign that you are a credit risk. Translated into quantifiable terms, this means a lower credit score. 3. Unpaid community fines. Yes, you read that right. Your unpaid parking tickets, speeding tickets, and even library fines can actually affect your credit score! Small fees add up to large amounts. If you??re unlucky enough to have the collector report your unpaid dues over the months or years, then your credit score just might take a beating. So what is the moral of the story? Make ALL those payments when they are due. Spend wisely. Avoid killing your own credit score.