REPAIR YOUR CREDIT RATING

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Most financial experts say that it’s important to maintain a good credit rating, even if you are not planning to increase your borrowings in the near future. At some point in the future you may well want to do so; at that point, if your credit rating is poor, or simply inaccurate or out-of-date, it could cause you problems. At the very least it could cause you delays.

As I have mentioned before, I subscribe to “Moneywise” magazine and I find it a useful resource. It’s also a quick read, which is very important to many people. I wish I had known about it back in the late ‘90s when I faced my own debt problems. Being in debt is stressful and that’s why very often advice needs to be clear and succinct.

This month’s issue of the magazine contains a helpful article on the very question of boosting your credit rating. The article is not available yet on the Moneywise website, so you’ll have to buy the magazine to read the full piece. (March 2012, page 44; good value, I’d say, at £3.95)

To summarise:

  1. Get hold of your credit report from one of the three main credit reporting agencies in the UK: Experian, Call Credit and Equifax. They are required by law to provide a basic one for £2.
  2. Look for mistakes; lenders often misreport and still show debts as being unsatisfied, even though they have been paid in full.
  3. Check for old addresses: are your old addresses in there? Are they spelled correctly? You need evidence of your past payment performance.
  4. Check for hidden debts: balances that had built up of which you were unaware. (e.g. forgotten direct debits on unused accounts)
  5. Show your stability. Long relationship with one bank? Landline phone? On electoral roll?
  6. Cancel unused credit cards, debts, accounts. (I myself need to look at this; I have several cards I never use)
  7. Get a credit card, if you haven’t got one. This seems illogical but it’s a good strategy. Manage it sensibly; that provides evidence of your “probity”.
  8. Be careful who you link your finances to. Applying for joint credit will link your credit reports, of course.
  9. Don’t make lots of applications for credit at the same time.
  10. The Golden Rule: don’t miss payments. If you can’t avoid missing one, contact the lender / credit card company in advance; don’t just default.

 

CREDIT SCORING ADVICE FROM A CREDIT RATING AGENCY

Way back in 2004 I found a great online resource on this subject from Equifax. That’s really “from the horse’s mouth”, because they are one of the three UK companies mentioned above, who do the credit reporting. The information is still valid and it’s still on Equifax’s website.

The title was “Rebuilding Damaged Credit”. Some of the advice overlaps with that of “Moneywise”, some not.  Here’s a summary of it:

Open new accounts … and pay them off

Being able to repay a variety of new accounts helps rebuild your credit. Opening and paying off as many different kinds of accounts as you can is better than adding more debt to an existing credit card.

 Start small

Rebuilding your credit can be similar to starting over from scratch; starting small may be the easiest option. Credit cards from department stores can be useful. (Warning: if you don’t pay the full balance every month, their interest rates tend to be among the highest)

 Consider asking for help

If you can’t qualify on your own, ask a friend or family member to co-sign for a small loan or credit card.

 Consider a secured credit card

They are guaranteed by a deposit that you make with the credit grantor; they offer the purchasing power of a major credit card. Make sure the grantor reports payment histories to a credit reference agency, so you’re building your positive payment history.

 Use new accounts in moderation

And make payments that are more than the minimum.

 Keep balances low

Avoid carrying a balance that is more than 30% of your credit limit, because creditors may view that as excessive debt.

 The bottom line

 It’ll take time for your new credit history to gain momentum, so be patient. You’re demonstrating your financial reliability; that’s why opening and paying down accounts may make it a little easier to get more credit in the future if you need it.

 

WANT TO KNOW MORE?

For the resources mentioned above:

For the Equifax resource in full: http://www.equifax.co.uk/Products/learning-centre/rebuilding_damaged_credit.html

For a short “Moneywise” video on improving credit rating: http://www.moneywise.co.uk/cards-loans/credit-cards/how-to-improve-your-credit-record-tv

For the article: “Ten ways to boost your credit rating”. Available in “Moneywise”, March 2012, page 46.

 

For info and links re my e-book “Back to the Black: how to become debt-free and stay that way”, click HERE.

It’ll also be available in paperback from Amazon in a couple of weeks; I have the proof copy in my hand right now.

 

 

 

 

 

 

BAILIFFS: LAW CHANGES PROPOSED

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According to the BBC news this morning, the UK’s Justice Minister Jonathan Djanogly says clarity is needed about what bailiffs are legally allowed to do.

New proposals are in the pipeline, including a ban on the use of force. There’ll be detail on what items bailiffs cannot take from homes.

This is welcome news. However, as I say in my book “Back to the Black”, there is already a code of conduct about debt collection; a code that is often broken by debt collecting companies. Let’s hope that the new code of conduct for bailiffs will be better observed, or this will be a waste of time and money.

Here’s what I say in my book about the existing code:

Harassment

It is illegal for creditors to harass debtors. The following definitions of harassment are taken from the website of the UK’s Office of Fair Trading (OFT). Sadly, I know from experience that many of these practices are used by many creditors.

 Physical/psychological harassment: putting pressure on debtors or third parties is considered to be oppressive. Examples of unfair practices are as follows: 

  • contacting debtors at unreasonable times and at unreasonable intervals
  • pressurising debtors to sell property, to raise funds by further borrowing or to extend their borrowing
  • using more than one debt collection business at the same time resulting in repetitive and/or frequent contact by different parties
  • not ensuring that an adequate history of the debt is passed on as appropriate resulting in repetitive and/or frequent contact by different parties
  • not informing the debtor when their case has been passed on to a different debt collector
  • pressurising debtors to pay in full, in unreasonably large instalments, or to increase payments when they are unable to do so
  • making threatening statements or gestures or taking actions which suggest harm to debtors
  • ignoring and/or disregarding claims that debts have been settled or are disputed and continuing to make unjustified demands for payment
  • disclosing or threatening to disclose debt details to third parties unless legally entitled to do so
  • acting in a way likely to be publicly embarrassing to the debtor either deliberately or through lack of care, for example, by not putting correspondence in a sealed envelope and putting it through a letterbox, thereby running the risk that it could be read by third parties.

 Source: OFT website, “Debt collection guidance: final guidance on unfair business practices.”

 

WANT TO KNOW MORE? 

For the BBC News item on the proposed law changes: click here

For a link to my book “Back to the Black,” containing details of the existing UK code of practice governing debt collection: click here

 

 

 

 

 

 

 

 

 

NATIONAL DEBT HITS A TRILLION: PERSONAL DEBT 50% HIGHER

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I’ve just heard on the BBC news that the National Debt (that’s the UK, by the way) has hit £1 trillion. That’s news; that’s big news; doubtless our chief Prophet of Doom, Robert Peston, is getting ready to intone his ponderous views on its significance.

However, personal debt in the UK exceeded £1 trillion long, long ago. When my book “Back to the Back” was published in 2010, UK consumer debt (i.e. mortgages, credit card debt, loans, etc, etc) was almost £1.5 trillion and was slightly more than GDP, the usual measure of national output.

As British National Treasure Michael Caine famously said: “Not a lot of people know that.”

 

WANT TO KNOW MORE?

For information about my book “Back to the Black”, click here:

POSITIVE AGEING EVENT

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If you live in or near Bristol (that’s the UK one), you might well be interested in this April event being run by my friend David Griffiths.

 

Positive Ageing 

a personal development approach to growing older 
Are you no longer ‘young’ – and not ready to get ‘old’? 
Positive Ageing is a two day transformational course which provides people with the tools to take more control, so that getting older can become a process of opening up rather than closing down. 
Positive Ageing provides a space and process for:- 
learning how to gain a new perspective on your own ageing process 
exploring the techniques for cultivating a positive approach to the future 
enhancing your emotional resilience to some of the potential challenges of later life 
The next Positive Ageing course takes place on Saturday 21st and Sunday 22nd April, from 10am to 4pm. 
To book your place or to find out more information email – info@positiveageing.org.uk or phone 0117 942 3310. 
Ageing is inevitable – growing old in mind and attitude is optional! 

VIRGINIA IRONSIDE: “HAPPIEST YEARS OF MY LIFE”

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Part of “When I’m Sixty-Four” will be about people who have decided not to grow old gracefully. One of those I came across online is Virginia Ironside, agony aunt and columnist.

(On her blog she says that she’s also written quite a few books and that “in the later years of her life” it turns out that she’s “written enough books to merit the title of writer”.)

I know that she is an Honorary Associate of the National Secular Society, which describes itself as “campaigning from a non-religious perspective for the separation of religion and state and promoting secularism as the best means to create a society in which people of all religions or none can live together fairly and cohesively.”

Ironside got a lot of complaints when she said a couple of years ago on a BBC1 religious discussion programme:  “If a baby’s going to be born severely disabled or totally unwanted, surely an abortion is the act of a loving mother.” But I also know that she writes regularly for The Independent and The Oldie, so she gets my vote.

You can find out lots about her earlier life online; but what about now? She says that she is “Single, 67, with one son, who plays in the Ukulele Orchestra of Great Britain (http://www.ukuleleorchestra.com). Not totally happy (but who is? Don’t let’s kid ourselves. Many more of us wake up in the morning dreading the day ahead than would like to admit) and very, very lucky, in that I have two wonderful grandchildren and I’m still working. Like most people of my age, I don’t fear death, but fear getting mad, incapable and gaga.”

Happiest years?

She adds: “The years after being 60 have, no question, been the happiest year(sic) of my life. That’s why I wrote No! I Don’t Want to Join a Bookclub, a fictional diary of being sixty and a grannie. In the summer of 2009 I put myself on stage at the Edinburgh Festival with a show based on my latest book, The Virginia Monologues, 20 Reasons Why Growing Old is Great. and I hope to do more stage appearances. I feel really grateful that, for me at least, it does seem there is gold at the end of the rainbow.  Well, don’t let’s go mad here. Not gold, perhaps, but certainly not a pile of old rubble. Isn’t that all one can ask?”

More strength to your elbow,Virginia!

How time accelerates

By the way, I thought that it must have been a typo when she wrote that “The years after being 60 have, no question, been the happiest year of my life.” So I was about to insert an “s” after “year”. But then I realised that – maybe unwittingly, maybe not – she had put her finger on one of the things we all notice most about getting older (and I’m a year older than her) – the fact that the years rush by so quickly. So maybe the 7 years sinceVirginia was 60 really did seem like one year. Read Alvin Toffler’s “Future Shock” for a suggestion about how to solve this conundrum.

On this subject of accelerating time, I love the story about the then 80-year old Tony Curtis being asked by an interviewer to describe his film career. He said: “Well, I arrived in Hollywood as a very young man, with very little money. So I checked into the cheapest hotel I could find; then I had a shower, put on a clean shirt, and came down here to meet you.”

 

WANT TO KNOW MORE?

For more about Virginia Ironside, click here.

For more about the National Secular Society, click here.

For more about Alvin Toffler, click here.

PAYDAY LOANS IN THE NEWS AGAIN

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I appear to be stalking Simon Read of The Independent. If so, that’s because payday loans are again in the news and this is a story and a cause he has taken up and because he writes well on the subject.

The latest twist in the story: research by Shelter (a UK housing charity) reveals around seven million people are turning to credit to try to keep a roof over their heads.

A million use payday loans to cover rent or mortgage

In the past year alone, almost one in seven of those – i.e. just under one million people – have resorted to payday (i.e. emergency) loans to cover rent or mortgage payments.

The Independent has warned that payday lenders are cashing in on the struggles of millions who are unable to borrow from mainstream lenders and those companies charge interest rates of up to 5,000 per cent.

The impressive Campbell Robb, CEO of Shelter, said that this “… shows the extent to which millions of households across the country are desperately struggling to keep their home.

“Turning to short-term payday loans to help pay for the cost of housing is totally unsustainable. It can quickly lead to debts snowballing out of control and to eviction or repossession and ultimately homelessness.”

 What’s the alternative?

I cannot disagree with anything that’s been said above. It’s a sad state of affairs and I’ve no doubt payday loan companies in general are cashing in on the misery, despite what was said by the boss of Wonga to Simon Read and which I reported in an earlier post. There have been calls for these firms to be outlawed. But for the people who feel they have no alternative, what will they do if that happens?

Anyone in debt crisis who consults an adviser at one of the debt charities – such Citizens Advice or National Debtline or CCCS, here in the UK – would probably be told to avoid payday loans. But I wonder how many of the million people mentioned in Shelter’s report have actually talked to such an adviser.

I know that these resources are stretched; and as the charities reply to some extent on grants from the public sector, they may well become even more stretched because of spending cutbacks.

Need for financial advice

I don’t know the full answer – and of course it’ll be different in every case – but wider access to free, impartial and high-quality financial advice must be part of it. What’s more, financial education has to have a higher priority than it does now.

WANT TO KNOW MORE?

For the Simon Read article (4 Jan) click here:

For information about my book “Back to the Black”, click here: