Budgeting to improve your credit score
Improving Your Credit Score By Budgeting
Choosing to take control of your finances can be a daunting task, however if you are struggling to make your debt repayments each month, maybe it is time to start looking at ways that you can cut back on your outgoings and start repaying your debts, otherwise you risk a damaged credit score.
One efficient way to do so is to create a budget planner
Containing all of your monthly outgoings, this includes your priority debts such as your rent / mortgage, energy bills and council tax, other debts such as credit cards, store cards and loans, and in addition to this your phone, broadband / TV payments, gym membership or other subscription services that you may be paying each month.
Once you have a clear idea of how much you ‘need’ to spend each month, you can then look at ways to free up some money to pay towards your stores cards, credit card and loan debts. Many people pay at least £15 per month for gym membership and that’s often the minimum! So if you’re struggling and not going to the gym, it may be wise during this time to use that money to pay back debts.
If you are going to the gym and making full use of it, an option could be to look at alternative free ways to exercise, such as jogging, walking or home exercise videos until your financial situation improves. Also having a look at alternative deals on comparison websites for broadband / TV and energy bills can save you money each month.
Another expense could be food.
Many households’ food purchases are simply wasted, to eliminate this try writing a list and planning your meals for the week and shop around for ways to cut your monthly food expense.
Budgeting in this way can help you to get a clear idea of how to spend your money wisely, after all you’ve earned it! Cutting back on other items and concentrating on meeting your debt repayments, will ensure that you retain your credit score, which will mean that you will be eligible for cheaper finance deals in the future.
Should you then wish to pay off your existing debts
A smart way would be to apply for a consolidation loan, which will enable you to pay off your existing debts, leaving you with just one manageable monthly payment to contend with each month. Your eligibility will depend on your employment status, and your income and it is crucial that repayments are made in order to keep your credit score.