Credit and Debt
My credit card bill has arrived and I realise that I spent more than I should at Christmas. I cannot pay it off. I am not sure that I can even meet the minimum payment.
The first thing to do, is talk to the credit card provider. Do not just ignore letters. Try and pay something. Also look around for better deals. Some providers offer 0% interest for six months on balance transfers. These deals can be good (if you do not make further purchases) and you can really reduce the balance significantly. At the end of the six months you could look for further deals.
I have known for some time that my financial situation is getting out of control. I have a job but all my money is used to pay loans, credit cards and catalogues. I am worried that I will not be able to pay my rent and council tax.
Take advice sooner rather than later and be in control of your finances rather than the other way round. Sort out what your priority debts are. These will be rent/mortgage, council tax, and utilities, secured loans and TV licence. Payments to credit cards, unsecured personal loans etc. are non-priority because of the limited options creditors have.
Once you have sorted out your creditors, work out your essential expenditure. You should make provision for your priority creditors and realistic living expenses. It is no use paring your budget to a level that is not sustainable. Once you have worked out how much is spare you need to offer this to all your creditors. Creditors will take a balanced view of all your circumstances. The key is to make an offer and stick to it. Creditors want to see regular timely payments. The CAB can help with multi debt problems and can issue self-help packs to those who wish to handle the situation themselves.
I have been refused credit. What can I do about it?
No one has a right to credit. Before lending money to you, lenders will want to be sure that you are an acceptable risk. In order to assess this, they may use a credit reference agency. The main agencies keep information about almost every adult in the UK. Other lenders may use a scoring system, and give you points for your age, job, whether or not you own your own home etc. If you are refused credit you should be given at least an indication of the reason for refusal. You can approach the main agencies and ask to see your file. You should send £2 and give your full first names, surname and postlude and any other addresses you have had in the last 6 years.
The three main agencies are Callcredit plc, Equifaxplc and Experian Ltd. If the details on file are correct then all is well. If the details are incorrect you can ask for them to be amended. You should write to the agency and ask them to either remove or change any entry that you think is wrong. You should explain why it is wrong and provide supporting evidence if you can. The agency should respond within 28 days telling you what anion they intend to take. If you are still not satisfied you can have a notice of correction of up to 200 words added to your file.
I have seen adverts for credit repair companies. How do they work?
Credit repair companies claim to clear debt records and charge, sometimes considerable, fees for doing so. The company will usually do this by applying to set aside a judgement. Even if the judgement can be set aside, usually on a technical ground, if you still owe the money, the lender will probably restart the court proceedings, which will involve further costs and prolong the length of time the judgement is recorded. The Office of Fair Trading has prosecuted some credit repair companies because they have encouraged people to ad illegally. The CAB can advise you if you have a poor credit history.
Last updated: February 22, 2007