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avoiding house repossion

There are more than 200,000 people in arrears on their mortgage in the UK. While this number is about half that at the time of the financial crisis around 2008-09, it’s still a significant number of people who are behind when it comes to paying for their home. If you having trouble keeping up with you mortgage payments this 10 step guide should help you find a way out:

Don’t let your debts build up

As the old adage goes – you should fix the roof while the sun is shining. The UK as a whole owes £66 billion in credit card debt and it’s this sort of debt that should be cleared as quickly as possible. While it might not seem an issue at the time, if things take a turn for the worst credit card debts can add to a list of issues.

Pay more while you can

Many mortgages allow you to pay a little more than your set amount each month and this ‘overpaying’ can come in very handy down the line. It will allow you to build up equity and curry favour with a lender if you, for example, lose your job and your ability to pay.

Protect yourself

It is possible to take out a ‘mortgage protection’ policy and this sort of product could come into its own if you come into difficulty and find it hard to keep paying your mortgage.

Know your budget

Repossession could be the end result of your spending spiraling out of control and often this can start off by losing track of what you’re actually spending. Use a budget planner to help you to understand how much money you have available. That way you’ll soon know if your funds are drying up and you’re getting into difficulty.

Act early

All of that means you’ll have the knowledge you need to act early and this is something that is crucial if you want to avoid the worst. Don’t bury your head in the sand and presume things will right themselves.

Claim what you can

If you lose your job then you might well be able to get support by claiming benefits. It’s important to seek this support when it’s open to you rather than being tempted to rely on emptying your savings.

Speak to your lender…

Acting early means speaking to your lender as soon as humanly possible. Ultimately, they want to recover their money so it’s in their interest to try to work out repayment terms that you are able to meet.

…and other experts

It’s also worth speaking to experts who know their way around this sector. You can pay to speak to an advisor or look to a charity of free service.

Consider selling up

If a house becomes a big burden then you might reach the stage in which the only way to stop repossession is to look to sell it quickly and avoid it becoming an even bigger issue.

If it gets to court…

If, however, the matter gets to court then it’s important to fully engage with the procedure. You should attend the court and could still, as The Telegraph notes, stop the proceedings at this point by making an offer to the court.

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Last week Joe posted about 10 Ways To Boost Your Credit Rating, which really made me think how bad it is that I actually have no idea what my credit score is! I assumed it couldn’t be too negative, as I don’t have the obvious signs such as an overdrawn bank account or maxed out credit cards but I thought it was important to find out!

So I decided to check my credit score online and it turns out I’m actually not doing too bad! I used the ClearScore credit checker which was really simple (and free!) to use. I thought I would need a lot of information and paperwork to complete it, but it was completely haste free. Once I’d filled out some basic questions about my address history and income it gave me my credit score rating and clearly told me what was good and what was bad about it. It also told me where I stand in comparison to the average score of people in my local area and the average UK score – I was pleasantly surprised to find I’m above average!

ClearScore Coaching

One of the best things about ClearScore was the coaching platform it offers after you’ve completed your credit check. They have an automated instant message system that acts as a personal credit score trainer, that gives you advice on how to Build, Repair or Shape Up your credit score and the advice it gives is specific to you and your thoughts about you finances. As you go along it adds the tips to your own personal to-do list which you can tick off as you complete later on. The IM chat was really entertaining and combined valuable advice with a conversational tone and threw in some cat videos too!

As my credit score was looking good I went for the Shape Up plan. My IM chat had already added and bunch of things to my to-do list and it handily split them up by quick wins and tasks that would require a little bit more effort. Best of all, they offer some refuel advice to motivate you to carry on, mine included pug puppy videos – always a winner!!

ClearScore smashed it

ClearScore identified that not having a credit card was negatively affecting my credit score and my ClearScore coach directed me to some comparison offers of credit cards that were appropriate to me, with links to check my eligibility really quickly! This is particularly helpful as there’s nothing more frustrating than filling out all the fields on a huge credit application only to be declined after clicking submit.

I hadn’t realised how simple it was to check my credit score before and just how many things can affect it. Having the personal credit score trainer has really helped me to understand my next steps to not just improving my credit score, but my finances also! Have you tried out ClearScore, if so what are your thoughts?

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Repairing your credit rating

Do you know what your credit rating is? If you do – is it good, bad or just average? Perhaps it’s something you have never taken into consideration, but a weak credit score could come back to haunt you when you need to borrow money – to buy your first home, perhaps.

You can check your credit report for free if you don’t know what your rating is – this is important not only so you are aware and can do something about it if it is poor, but also in case there are any mistakes.

Your credit rating is used to help lenders decide whether to lend you money or not, how much to let you borrow and sometimes even how much interest to charge you – so it is vital you know what it is and are always looking for ways to improve it.

So, with that in mind, here are 10 ways you can improve your credit score:

1. Stop Applying for Credit

If your credit score is poor, then an immediate step you can take to improve it is to stop applying for credit – credit applications are filed on your record, hold fire just until you have sorted out any problems on your credit file and improved your score.

2. Get On The Electoral Register

If you have never voted before then your name will not be on the electoral register. Not only are you unable to have your say when it comes to voting, if your name isn’t on there you will also find it much harder to get credit. You can register to vote online right now, enabling you to get your name on there instantly. This is a quick and easy win to boosting your score.

3. Pay Off Existing Debt

Of course, it goes without saying, that to increase your credit rating, you must pay off any existing debt. Banks and credit card companies will be unlikely to lend you more if it appears that you are already overstretched. If you do have existing debt then it is vital you show lenders you can borrow responsibly – because in time, this will improve your credit score. Make your repayments on time and even pay off accounts early if you can.

4. Pay on Time

Missing or making late payments on your mortgage, credit card, personal loan, gas or electricity bill will stay on your credit file for six years! So, make sure you budget so you can afford to pay these off and keep a close eye on when they are due so you don’t miss one. Where possible, try to align these to come out via direct debit straight after your pay day.

5. Use A Credit-Builder Pre-Paid Card

Some prepaid cards have a credit building option that can improve your credit score. So, you are loaned an amount – you agree monthly repayments and at the end of the year (as long as you haven’t missed any) this will be recorded on your report as one year of successful repayments.

6. Credit Builder Credit Card

You have probably heard that getting a credit card is a good way to improve your credit score – providing you use it to show you can borrow and pay off money.

If you have a poor credit history then there are credit-builder credit cards available – although it is important to be aware that the interest rates charged are much higher than standard credit cards.

7. Cancel Unused Credit Cards

If you are planning on improving your credit rating so that you can apply for a mortgage or other large credit application you should know that lenders will look at how much credit is available to you, not just how much you are actually using. Holding, using and paying off credit cards can benefit your rating, however, if your cards are sitting there unused then pull the plug! 

8. Avoid Expensive Credit Repair Companies

Credit repair companies often sound too good to be true and unfortunately that is usually because they are. Credit ratings are pretty black and white, regardless of their help you will need to improve your credit rating yourself so avoid where possible paying someone else to do it.

9. Avoid Joint Credit With People With Poor Credit History

Being tied into joint forms of credit such as bank accounts, loans or mortgages with someone who has poor credit history will affect your ability to gain credit due to a ‘financial association’. Disassociating your credit from theirs is most often the best thing you can do for both parties in the long run until you both have good credit history.

10. Remove Any Mistakes On Your Credit Report

One of the reasons it is so important to check your credit report is in case there are any mistakes. It is not at all uncommon to check a report and find that someone has fraudulently applied for credit in your name. If this is the case you can contact the related company in question to have the instance investigated and removed – boosting your credit rating very quickly.

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If you are tackling debt repayments, it’s very important you understand your rights when dealing with creditors, debt collectors and bailiffs.

First we should consider the difference between these, as this impacts what they can and can’t do when collecting your debts:

  • Creditor – the company who the debt is owed to.
  • Debt collector – they are employed by the creditors to collect the debts on their behalf.
  • Bailiff – a bailiff has the legal power, through the court if court action has been taken, to ask you to pay what you owe and if you do not, can take and sell your possessions to raise the money required for your debt repayments.

When dealing with debt negotiations and repayments, it’s important to remember that there are rules in place to ensure that you never feel threatened; here are the ones that you should be aware of:

You have the right to make a complaint, should you feel harassed

Your creditors can contact you with reminders for payments, they can also instruct a debt collector to telephone you asking for payment and to call you at your home, if it is a reasonable time of day. Creditors can also take court action.

However, the line is drawn when contact from creditors and debt collectors starts to take on the same principles associated with harassment. Therefore, you have the right to make a complaint to your creditors and a professional body if they are:

  • contacting you several times a day
  • contacting you early in the morning or late at night
  • using more than one debt collector to chase you
  • contacting you via social media sites, such as Facebook or Twitter
  • threatening you either verbally or physically
  • sending you paperwork forged to look like official documents, such as court orders
  • not disclosing if your debt has been passed on to an external agency
  • implying that they can take legal action, when they can’t
  • implying that court action has been taken against you when it hasn’t

Should your creditors or a debt collector do any of these things you have the right to complain about their behaviour and practice by gathering evidence of harassment and taking it higher up.

If you are dealing with bailiffs, they must:

  • only visit your property between 6am and 9pm
  • not attempt to enter your property if only a child under 16 is present
  • not use excessive force to enter your property, unless granted permission
  • only enter the property through a door
  • look after any belongings they take away
  • charge fees and expenses that aren’t allowed by law
  • keep any joint owners of belongings informed.

If a bailiff breaks any of these rules, then you can appeal to the court to have your belongings returned.

You have the right to ask creditors to freeze interest and charges

The Lending Code and Credit Services Association Code of Practice suggest that creditors should consider freezing charges and interest if you approach them and notify them that you are experiencing financial difficulty. There is no guarantee they will comply, but they are all bound by those two codes of practice and therefore should take your request into consideration. It’s one right many people do not realise they can exercise and while it’s not guaranteed, it’s a good idea to ask.

You could also look at whether a debt solution could help you. An IVA register for example guarantees that interest and charges are frozen while you repay your debts. If you’re in debt and struggling to make ends meet, it is recommended you seek expert debt advice.

You have the right to dispute debt

If you believe your debt is statute barred – this means it is not enforceable because the creditor has taken too long to chase payment – you have the right to dispute this. Statute barred does not mean your debt has been written off, it simply means the limitation period has expired and creditors can no longer take the debt to court and enforce it. For most unsecured debt types in England and Wales, creditors have a limitation period of six years to chase you for payment. If you also do not believe the amount owed is correct you can dispute this or ask for them to verify the debt.

You have the right to seek advice

When seeking a solution to your debt, bear in mind that you have the right to seek advice. There are various debt management companies out there that offer free, impartial advice and support before assisting you with setting up a debt solution, such as an IVA or a Debt Management Plan.

It’s very important that you know your rights when dealing with debt. Seek free advice and stay on top of your repayment schedule to ensure everything is covered and that you understand what is fair and unfair.

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If you’re having a hard time making ends meet and it’s causing you concern financially, you might feel tempted to apply for a loan to cover your expenses. However, before pressing ahead, remember that a loan isn’t always the ideal solution to your money problems.

Debt management is a national issue that needs addressing. The average total debt per household in the UK is £54,952. There were 22,503 individual insolvencies in England and Wales just between the months of April and June 2016, with 3,537 of them being bankruptcies and 12,225 of them being Individual Voluntary Arrangements (IVAs).

Individual insolvencies have increased for the fourth consecutive quarter. With this information at hand, we can see that debt is undoubtedly a huge concern for many of us in the UK, and yet not many of us openly discuss our debt management solutions or the implications that our financial choices have on our health, our credit scores and our future.

Before taking out a loan, consider the following points which will help you make the important decision of whether or not a loan is right for you at this moment in time.

Are you borrowing from Peter to pay Paul?

Taking out one loan to pay off another is rarely a good financial idea, but it is still a very common occurrence. More than half of the people taking out a personal loan are doing so to repay debt of some sort.   

This is a form of debt consolidation, and is attractive to many as the individual only has one bill to pay per month. However, if you are already in debt, it is unwise to take out more credit, as spending behaviour rarely changes. People still use their credit cards, meaning their debt continues to mount. If this is the case for you, it won’t be long before your debt spirals out of control and you are left with a situation that feels insurmountable.

Rather than solving debt with more debt, consider approaching your existing lenders to see if changes can be made to your payment plan. Reassess your current spending and you will doubtlessly find areas that you can save on in order to repay current debts, without resorting to further loans.

Do you have a plan to repay the money?

Taking out loans may have become normalised in the UK, but it is still a serious financial undertaking and a great responsibility. Interest means that you usually end up paying back more than you borrowed. If you are unable to make your monthly repayments, then the amount you stand to repay will increase as time goes by and, before you know it, you might be looking to debt management options such as DMPs or IVAs to resolve your problems.

Before you take out a loan, consider whether you will be able to reliably meet the monthly repayments. If you are, then your credit rating won’t suffer. Conversely, lenders will be disinclined to lend to you in the future if you show yourself to be unreliable. Assess your incomings, debts and outgoings and determine whether or not this loan is financially viable.

Have you applied for a number of loans recently?

When deciding whether or not you are a good candidate for a loan, the lender in question will refer to your credit report. The report will show your lender how many loan applications you have made over the past six years. If you have made multiple applications over a short period of time, this will indicate to your creditors that you are desperate, making you an unappealing prospect. It will also suggest to your lenders that you, more than likely, have been rejected from many other creditors, which is another bad sign.

To resolve this situation, apply for loans sparingly. Space them out and only apply for one if they are strictly necessary. Some banks even have websites you can use that will give you an indication as to whether or not you are likely to be accepted for credit. This means that you don’t have to formally apply, and your search will therefore not be shown on your credit report.

Do you really need this loan?

Consider whether or not this loan is entirely necessary. If you are planning on buying a car to get from home to work, then this could be a good investment — but have you compared the cost to taking public transport instead? If you are taking out a loan to go on holiday, then regardless of how tempting it might be, you should probably refrain from approaching a lender. Everyone needs to treat themselves every now and then, but don’t do it at the expense of your credit rating.

Where to go for advice and assistance

If you are suffering from debt that you can’t climb your way out of, then it is best to see a debt management professional. Insolvency Practitioners (IPs) have access to modern debt management software that will take into account your financial situation and put together repayment plans based on what is realistic for you.

You don’t need to cope alone and you don’t need to take out another loan to resolve your situation. There are advice agencies open to you if you are continually looking for short or long-term goals to keep afloat. Consider contacting the Citizen’s Advice Bureau, the Money Advice Service or the Government Debt Advice site. Remember that debt can seriously affect your mental wellbeing. Rather than dealing with everything alone, find a professional who will be more than happy to give you all the help you need to turn your life around.


Study Abroad

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There's a lot to think about when you're moving abroad to study in a new country; is your accommodation going to be ok? Do...