Have you assessed your finances yet this year?
It’s as painful and as easy to put off as going for your first run or heading to the gym for the first time. But if you don’t already, make this year the year you take control of your finances – and stick with it.
Peter Turner, Managing Director at Experian Consumer Services UK&I, has these key steps to doing a Credit Health Check which will help you spend sensibly and manage your finances into the New Year:
1. Begin with a budget
If you do one thing this year, make a budget. Look at your income and your real outgoings, your mortgage payments, utilities, travel, any credit repayments you may have. Allow some room for manoeuvre for unexpected expenses and then factor in your living costs. Now that you have a realistic figure in mind, now is the time to consider any big financial outlays you may have for the year and considering how to you will finance them. Whether through savings, using credit facilities you already have or applying for a loan, forward planning will reap rewards.
2. Check your credit report
Whether you’re planning a significant life-changing expenditure in 2013 such as moving home or getting married or just want to ensure you are in the strongest position should you have any unexpected expenditure, the next step of your Credit Health Check, should be checking your credit report. By knowing what’s in your own credit report you cannot only see what lenders see, but you can also take steps to better manage your credit and to improve how you are rated. This could not only affect whether you get the credit need but also, potentially have an impact on how much you are charged for that credit!
3. Review your bills
Once you know your outgoings, take advantage of a dreary January weekend by spending some time seeing how you could trim any of your bills including utilities, insurance, credit cards etc. Experian CreditExpert customers, and those on the free 30 day trial, have access to a unique credit comparison tool which tailors your financial profile to the best deals for your individual needs and the products lenders are most likely to offer you! By investing a little time you can save a lot of money but do remember to look beyond the headline figures to ensure any new provider really does all that you need it to. Check prices across the same time period, contract length and possible penalties should you break your existing contract.
4. Spring clean by closing unused / old accounts...
If you have several credit or store cards, take some time to close down those you don’t need anymore. Not only does having an account open without using it increase your risk of fraud, a having a large amount of unused credit available to you can potentially have a negative impact getting further credit, especially larger amounts. Your Experian credit score will give you an indication of how you could be rated and also the positive and negative factors affecting your score.
5. ...but not too many
As part of your Credit Health Check consider how you manage the credit you already have. You may not realise but being overextended by £1,000, spread across three cards, is viewed better than all being on one which is then maxed out. A good rule of thumb is to only use 30-50% of your available balances on any credit facility you have.
6. Set up a Direct Debit payment for your credit cards
One in four of us don’t realise that missing card payments is one of the most significant factors that could harm your credit rating. Furthermore, it stays on your credit report for six years and so it is worth considering setting up Direct Debit payments to take care of at least your minimum payment each month – and then try to make an additional payment as well, when you can.
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