Loans

Where to get Help with Debts

If you are in debt it can sometimes be difficult to know where to turn for help. It might be that you want some advice on where to start to get out of debt or just someone to talk to so that you can talk to them about your problems without fear of being judged. There are places where you can find help.

It can be good to speak to a family member or a friend if you can. If you know someone that you know will listen and understand it could just help you to get the problem out in the open. Sometimes just being able to talk about it can help you move forward and start thinking of solutions. Just to voice the problem will make it more real to you and then you will be able to start thinking about what you need to do to resolve it. There may be some that have been in the situation themselves and be able to help you. Of course, you want to only tell people you trust will keep it themselves and that will not judge you negatively as a result of it.

You may feel that you would rather not talk to someone you know and that is perfectly understandable. There are free counselling services available where you may be able to talk to someone and that could help a lot or it might be better to go to a specialist debt agency. Either way you can use a free phone line or an email service online in order to help.
It is wise to go to the citizen’s advice bureau as they will be able to direct towards free help. They will put you in touch with someone that can help talk you through your finances and help you to work your way through paying it all back. It may seem very daunting to try to do this on your own, particularly if you are not good with figures and they will be able to help you.

If you are worried about finding help face to face then there are places online that you can go for help. There are many money advice websites out there which you could look at. The government run ones are probably the best place to start because they have useful and trusted information and links to reliable sources of information to help you. With these sites you will have to do the work yourself. You will have to be motivated to actually take the necessary steps rather than having someone else supporting you. Of course, in both situations the changes will have to come from you, but with the support from another person it could be easier. It does depend on your personality really.

It can also be wise to talk to the places that you owe the money. They may be able to help in some way as well. They may be able to organise a more affordable repayment plan for you or move your debt to an account with more competitive interest rates. It is worth talking to them as they will not make things worse and they could help. Lenders do want their money back and so if they can find a way to help you to repay, they will. They would rather it was repaid than if it was not.

In the end it is really yourself that you need to go to for help with your debts. You need to be prepared to make the lifestyle changes that will get you out of debt. You will need to spend a lot less money, earn more and put every spare penny into paying them off. It will be a daunting challenge and it may not feel like any fun, but once it is done you will feel fantastic. You will be so proud of yourself for making that commitment and sticking to it. It will take time too, but it will get easier the more you do it. You will form new habits with regards to spending and earning and you will find it is easier to pay off the debt once some is already paid off as your interest charges will go down so you will have more money freed up to pay off the outstanding amount.

So there are lots of possible places that you can go to get help with debt. It is worth considering each one and thinking about which will benefit you the most. You may choose all of the options or just pick one of them but you will need help and support along the way. It could be a long journey to being debt free, but many people have achieved it and so you can too, as long are you are prepared to change.

Credit Score

How to Improve Your Credit Score

If you have a bad credit score it can mean that you will be restricted in what you can do. It will mean that it will be very difficult for you to borrow money, so whether you want a car loan, mortgage or credit card, you may be refused. It may even affect the chances of you finding a house to rent, getting a good utility deal or finding a job. It is therefore really important to try to get a good credit score.

If you have never had the opportunity to pay bills, borrow money or things like this, then you will not have a good credit score. This is because you have not been able to show that you are capable of making payments on time. This is no reason to borrow money though, there are other things that you can do to build up your credit score. If you get your name put in utility bills, get a credit card and pay it off each month in full, organise an overdraft and do not use it or other similar things , you should find that these will enable you to get rated. Then, as long as you make repayments on time this will help. It will also help you if you stay at one address for a significant amount of time rather than moving home a lot and make sure that you are on the electoral role at your current address.

If you have debts then your credit score is based on this. It means that you may not be trusted financially because of this and therefore you could find that it has a detrimental effect on your options. In order to prove that you can be trusted you will need to start working at it. Make sure that you always make all of your payments on time. This is not just your loan repayments but also your bills and rent and anything else that needs to be paid.

Make sure that you pay everything on time so that you can prove you can make repayments.
It is worth checking your credit record every so often. You may find that it is not correct and that is why you are having trouble getting credit. Make sure that items on there are correct. If there are things listed that you do not recognise then query it and have them removed or make sure that you have paid them off. You can pay as little as a few pounds to see your credit report and then you will be able to contact a credit reference agency if the information is incorrect and add a notice of correction to show that your circumstances have now changed.

Any late payments on utility bills, mortgage, loans or credit cards will stay on your record for up to six years and so you need to be careful of this. A CCJ will also stay on for as long and so avoid this if you can. If you are jointly named on something where the other person has a poor credit record, this will also be reflected in their attitude towards you.

If you have credit available to you, perhaps in an overdraft or credit card, that you do not use, then this could count against you. Lenders may look at how much available credit you have when they are deciding whether to lend you money and they could decide that they will not lend to you as you could potentially accumulate lots of debt. So get rid of cards that you are not using.

Having a permanent job is obviously a really big plus as well. Something with a good contract, rather than zero hours and that is reasonably secure. Knowing that you have an income coming in and that it is from a source that is likely to continue, makes a great deal of difference.
If you keep applying for credit and being turned down it will look bad on your credit report. It is best to stop doing so until you can improve it. By applying for a lot, it looks like you are desperate to get into debt, which is obviously not a good thing.

There are some pre-paid cards which can help to improve your credit rating. You will be loaned a very small sum of money by the card company and be asked to pay it back on a monthly basis. This will prove that you are capable of making repayments and paying off debt. However, these can be expensive and there will be fees as well as interest on money borrowed. There are also credit cards which can do the same thing but the interest payments will be far higher than on a regular card. If you pay the balance back each month you can build up your credit rating, but it could be tempting to get into more debt instead and be liable for the really high interest rate.

Debt

Differences between Good and Bad Debt

In some peoples head all debt is the same thing. Some worry about being in debt, do not like idea of it and will not consider it. However, there are different types of debt some are good and some are bad and it is worth looking into both to enable you to distinguish between them.
Good debt is where you borrow money for a purpose that will actually gain you money. This applies to most mortgages, student loans and interest free credit. In these situations you will be investing the money that you borrow and you should make more than you spend. With a mortgage, for example, the home that you buy should increase in value enough to cover the cost of the mortgage and therefore it is seen as an investment. You will end up not having to pay rent, owning a home which should increase in value and therefore gaining more than you have spent. There are of course exceptions to this as some homes decrease in value should the area they are in suddenly become less valuable perhaps due to flooding or the desirability of the area. If you do not keep up the repayments on the mortgage then you could end up paying a lot more for it than you would otherwise and you might find that you lose the house in the end as well.

A student loan pays for a course which should improve your employment prospects and allow you to get a better paid job, but you will need to choose your course carefully to make sure that it will offer you that. Some courses will lead to great careers but others may be more theoretical and they may not naturally lead to a job, which could mean that you are not much better off having the degree than if you hadn’t got one in the first place.

Interest free credit can be fantastic. It means that you can buy things and not pay for them for a while. You can put the money that you would have spent in a savings account and then get the interest on it until you need to pay back the debt. This has better results when interest rates are high as you can get a bigger return on the money that you are saving. You do need to be careful though and make sure that you repay when needed or else it will not be worth doing. You will find that the fees and charges could be extremely high.

Bad debt is usually things like credit cards, overdrafts, store cards and other debt where the money has been spent on unnecessary items. If you borrow money to buy new clothes, home decorating items, or anything else that is unnecessary. When you borrow money you end up paying a lot more for items that you buy with than if you had used money that you had already or waited to save up. It can feel very hard too, when you have lots of debt and do not have very much to show for it as clothes wear out and homes need decorating regularly.

Not everything can be neatly categorised into good or bad debt though. For example, borrowing money to buy a car for a job interview as it is the only way you can get there but risking not getting the job, or borrowing to buy your children lovely Christmas gifts, which are obviously a luxury but would mean a lot to them. It can be a very personal thing to you as to whether you think buying something is necessary or not.

Everyone has very specific reasons for borrowing money and only they know how important it is for them to have it. Only they can evaluate whether they think that the loan will be good for them or not. They will have to consider both sides, the advantages and disadvantages of taking the loan but also of not taking the loan and decide whether they want to do it. There are some very clear cut examples of good and bad debt but most types of borrowing fall somewhere in between and it is much harder to judge whether it is something worth doing or not.

Whether the debt is good or bad it will need to be repaid. It is therefore not just to evaluate whether it is good or bad but also to consider if you can repay it. Good debts tend to be longer term, which may mean repayments are smaller but it will take a very long time to pay them back and you have to decide whether you are going to be able to commit to this. Even with a short term loan you still need to make sure that it can be repaid.