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7 Quick Tips on Dealing With Debt

Written by Alex Swindells on . Posted in Debt help.

Managing your finances when you are in debt can be incredibly stressful. It’s difficult to find the right balance so you can manage debt repayments and increasing interest, while also covering your monthly living expenses. More people find themselves in this situation at the moment because energy price hikes, inflation, and the increased cost of living are putting more pressure on their finances. Currently, the average UK debt for adults is £33,000 and this figure is likely to increase in the near future.

When debt is piling up, it’s always a good idea to seek advice from a specialist before things get out of hand. However, there are some key things you can do to stay on top of the situation. Here are 7 tips on dealing with debt.

1. Pay Off Credit Cards

Man paying with credit card on laptop.

Credit card debt should be a priority because they usually have high-interest rates and it’s easy to get into a debt spiral if you have multiple cards. If you are not in a position to pay off the full balance, pay off whatever you can afford. Paying little and often will bring the balance down and 

reduce the interest, making the debt more manageable. When paying off credit cards, focus on the ones with the highest interest first so you can reduce your overall monthly payments as much as possible.

If you have over 3 lines of credit with at least 2 creditors, you may qualify for an Individual Voluntary Arrangement or a Debt Management Plan. An IVA allows only pay back what you can realistically afford each month with any remaining debt being written off at the end of the agreed term.

2. Build an Emergency Fund

Drawing of man and woman adding coins to a jar to build an emergency fund

People assume that all disposable income should go towards paying off debts, but that is not true. As long as you are meeting the required contractual repayments on your debts, it can be a good idea to save money, even if you have a lot of debt payments to make. That way, if you are hit with an unexpected expense like home or car repairs, for example, you have money to pay for it.

Without an emergency fund, you may otherwise be forced to borrow more and push yourself further into debt. So, even if you can only afford to save a small amount, put aside whatever you can. If you do decide to save, always make sure you pay your contractual monthly repayment amounts on your debts first.

3. Take Account of All Your Debts

Young caucasian family having debt problems, not able to pay out their loan

Knowing exactly what you owe allows you to make an informed decision about how to deal with your debts. But when you have lots of different debts, it is easy to lose track. So, gather all of your debts and write them down on a piece of paper so you can get a total figure for what you owe and how much your monthly repayments are.

Visualising your debts in this way helps you see whether you can actually afford to pay them back or if you need to seek help. If you find that you cannot realistically afford to pay your debts, Swift Debt Help can assist you. You may be eligible for a formal debt solution such as an IVA or Debt Relief Order if you have multiple debts. Otherwise, we can talk you through the rest of your options and find the best way for you to tackle your debts.

4. Prioritising Debts

Man writing down his debts, using laptop to look at finances

If you do decide that you can pay debts on your own, you should start by prioritising them. Sort them into the most and least important based on how much you owe, what the interest rates are, and what the consequences for non-payment are. For example, if you are on a last warning your creditors could take legal action and pass the debt onto collectors. This could result in bailiffs being instructed who may attempt to repossess items from your home as a means of satisfying the debt. This debt would be considered a priority debt.

If you have council tax debt and your arrears reach a magistrates court, you could be issued a CCJ, an Attachment of Earnings Order, or even sent to prison, so this debt would also need to be dealt with as a priority. 

Ideally, you should pay all debts on time. But when this simply is not possible, prioritise them and focus on the most important ones first.

If after prioritising your most important debts you find you don’t have enough left over to pay the rest of your creditors what they are demanding, get in touch with Swift Debt Help to explore all the options available to you so you can understand the help available to people struggling with debt.

5. Create a Spending Plan

notebook budget calculation

A strict spending plan can free up more money to go towards clearing your debts. Start by tracking your income and all of your essential outgoings to calculate how much disposable income you have left. You can then start finding areas to cut back and save money.

Meal plans help you be more economical with your shopping, for example. You can also try turning down your heating a few degrees to make savings during the winter. Look at all of the small expenses like subscriptions too because these quickly add up.

6. Seek Help

Person holding man's hands, showing moral support through debt problems.

Trying to deal with debts on your own can often be difficult and extremely stressful. When things get out of control, always remember there are services available to assist you in resolving the problem.

Struggling to deal with the problem alone could make your situation worse, so if you find that you are unable to pay your debts, contact us at Swift Debt Help right away and we can show you what your options are. There are many different processes available that can help you deal with debt.

7. Exclude All Luxuries

Jewellery on display

Finally, you should try to exclude all payments that are not completely necessary. This includes eating out, delivery meal plans, TV subscriptions and memberships, buying lunch or coffee at work, cosmetic treatments, and any other non-essential purchases. Although this may seem extreme, it allows you to pay more towards your debts and chip away at them little by little.

Once you are meeting the minimum required monthly repayments on all of your debts, you will be in a more stable financial situation, and you can start paying for luxuries again if you wish.

If you have numerous debts of different types in varying amounts, it can be difficult to keep track of payments and manage your finances.

If you have read the above tips and feel that you may need more help, or wish to understand the options available to you in your circumstances, Swift Debt Help debt solution finder is a great first step in finding the help you need. You just need to enter your debt amount, your residential status, and your contact information and you will one of our friendly team will provide you with essential information about your available options. Otherwise, get in touch with Swift Debt Help directly and we will give you all of the expert advice you need.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Drawing of computer screen that shows 'credit score'

6 Ways To Improve Your Credit Score

Written by Alex Swindells on . Posted in Debt help.

Your credit score can dictate how much money you can borrow, what interest rates you will pay on loans, and even your job prospects in some cases. Unfortunately, if you find yourself in financial difficulty and you miss payments, your credit score will suffer.

If you are concerned about your credit score, here are 6 ways to improve it.

1. Make all outgoing payments on time

man looking at credit check document

One way to improve your credit score is to make all of your outgoing credit payments on time. If you can get into the habit of paying everything on time, it will show lenders that you are reliable and trustworthy.

If you are regularly missing payments, there are a few things you can do to make paying easier. Set up Direct Debits so that the payments are automatically taken from your account, and write a clear budget to make sure that you don’t miss payments.

2. Register on the electoral roll

Drawing of person putting polling card in ballot for election vote

One of the easiest ways to improve your credit score is to make sure you are registered on the electoral roll. Many people don’t realise that it can actually have a big impact on your credit score. If you are not registered, lenders have a harder time verifying your identity and this could lead to your application being declined.

Registering is easy. You can register online, and all you need to do is follow the on-screen instructions. If you are already registered, check that all of your details are correct and up-to-date. If not, update them as soon as possible.

It only takes a few minutes to register, so this is one of the easiest ways to improve your score.

3. Keep credit card debt below 30%

Young concentrated businesswoman in glasses and striped shirt working with papers at home

Your debt utilisation ratio is the amount of credit you are using compared to the amount of credit you have available.

It is best to keep your debt utilisation ratio below 30%. This means that if you have a credit card with a limit of £1000, you should not have debts of more than £300 on that card.

If your debt utilisation ratio is higher, it shows that you are reliant on borrowing to pay expenses or you are irresponsible with your credit cards. This could lead to your credit score being lowered.

It is a common misconception that not having a credit card at all is better for your credit score. Borrowing small amounts and paying them back on time will improve your score, but you must avoid borrowing too much. That’s why credit card debts of around 30% or lower are best for your credit score.

4. Develop your credit history

Woman using a credit card whilst on her laptop

If you don’t have much of a credit history, it can be difficult to get a loan or a mortgage. This is because lenders don’t have much to go on when they are assessing your application. This is a common issue for young people who have not borrowed money in the past.

There are a few things you can do to develop your credit history and improve your score. Many lenders offer credit cards specifically designed for building credit. Using these on a regular basis and paying the balance off in full will increase your score. 

5. Report mistakes on your credit report

Woman on phone to bank to report mistakes on credit report

If you have ever been refused credit, it’s important to check your credit report. Your credit score can be lowered if there are mistakes on your report. These errors can range from incorrect information about your address or date of birth to missed payments that you have already paid.

If you find an error on your credit report, it is important to report it straight away. You can do this by contacting the company to which the credit relates, and ask them to update their records. You could also contact the credit reference agencies (Experian, Equifax, and Callcredit) directly and raise a dispute, they will then contact the Lender on your behalf. The issue will be investigated and, if appropriate, will be rectified. Your score will then be adjusted accordingly.

6. Ensure your credit file has no fraudulent activity

fraudulent activity

If you suspect that someone has fraudulently opened a credit account in your name, it is important to take action straight away. This can be done by contacting the police and the credit reference agencies. You should also check your bank and credit card statements regularly for any fraudulent activity.

Fraudsters taking out credit in your name can seriously damage your score, so it must be rectified immediately. Just bear in mind that you may have to prove that you did not apply for the credit if it is not immediately obvious that you are a victim of fraud.

Struggling with your debts?

If you are looking to improve your credit score as a result of being declined for credit; or you are seeking credit in order to be able to meet your essential outgoings it may be the time to consider other debt repayment options. At Swift Debt Help we can talk to you about debt solutions based on your affordability. It is important to note that most debt restructuring options will be recorded on your credit file, and could have an impact on it. Call us on 0161 843 1516 to find out if another solution could be right for you.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.