Have You Entered 2016 With a Bad Credit Rating?
Bad Credit Rating Entering 2016 !
With statistics showing that the UK spend more than double of its European counterparts during Christmas, it is likely that many will now be feeling the squeeze financially – some borrowers even admit to being unable to afford credit card and loan repayments choosing to delay them until their next pay date in January to cover costs and see them through the new year. This signifies total overspend, which is the root cause of debt problems, which then results in a bad credit rating.
Why Will One Missed Payment Affect My Credit Rating?
As soon as you miss a repayment on a debt, not only are you charged but the lender alerts the credit reference agencies, this information then sits on your credit file and lowers your credit score and potentially gives you a bad credit score. Having a bad credit rating will mean that you will struggle to be approved for extra finance should you need to apply for it. Therefore a healthy attitude to spending is needed to ensure that there is no overspend and / or missed or late payments on any existing debts
Budget To Avoid Overspending
One of the key things to monitor your spending is to create a budget, this can be a simple spreadsheet detailing your income versus your outgoings and can help you to identify where your money is going each month and any spend that you can cut back on. Many people on a budget also find it useful to note down at the end of each day what their spend is each day – this can help to keep track of any overspend and to figure out what you can actually afford to spend each month – or what is left in the pot so to speak!
Budgeting for those in debt or with a bad credit score can also help people to pay off their debts more efficiently. Taking a realistic view of finances and working out a feasible way to pay off credit card debts and loans can be a positive step to redefining attitudes towards money and hinder future debt problems. This attitude can also help to build up a good credit score which is always a good back up should you need to apply for finance as it opens the door to better deals and lower interest rates on all forms of credit such as mortgages and loans for home improvements.
Therefore if you have made mistakes with regard to your finances in 2015 you can, with a little hard work and determination sort out your finances so that you won’t overspend in 2016 and risk debt problems or a bad credit rating the following year.
If you are concerned about repaying your multiple debts in January it may be time to see if you’re eligible for a debt consolidation loan. These loans are suited to those that need to gain control of their finances, but haven’t yet run into debt problems and are up-to-date with repayments or credit cards and loans. Being approved means that you’ll be able to repay these debts and have one cheaper debt repayment to contend with each month.
If you are unable to repay your debts please do not ignore the problem, take action. If you’ve been ignoring the problem, have already missed debt repayments and want to regain control of your finances, speak to a debt charity such as Money Advice Service, they can point you in the right direction in terms of debt management which is a solution that does not involve extra borrowing.