According to the latest study over eight million people missed repayments last year, and in doing so considerably reduced their chances of being accepted for cheap loans and credit cards. Just under half of the missed repayments were in fact credit card payments. If you miss a repayment or even make a late repayment it not only puts you at less risk of being able to raise finance but will also affect the rate you are offered if you are accepted.

The problem we are faced with in these uncertain times where credit is more restricted than previously, is the fact that all lenders will rely on a person’s credit score not only to decide if they want to lend to that person but also what rate they will charge, and also how much they are prepared to lend. Also when you bear in mind that any missed payments stay on our credit file for 6 years it is not only likely to affect you now but also for quite some time.

So how do you avoid getting into trouble in the first place?

If you have existing credit and have never missed any repayments, but feel apprehensive about your financial future for whatever reason. There are a number of steps that you can take to prevent this from happening.

– Work to a strict budget: Write down your income and outgoings to identify exactly how bad your situation currently is. Once you know exactly where you stand you should then look at what you are spending your income on each month to see of you can cut down on your expenditure. It is very important that you are very thorough when you do this and do not discard any potential savings no matter how small they may be. The more you can shave from your expenses the more you have to pay our bills.

– Consider debt consolidation: consolidating all your expensive credit card and unsecured loan debt into a cheaper rate consolidation loan can save hundreds of pounds each month depending on the sum of all your debts. If you decide to opt for this route there are a number of things that you must do to ensure that you do not get yourself further into trouble. The first thing I would recommend is that you take the consolidation loan our for the shortest term possible where you can comfortably afford the repayments each month, and also have enough to put some money into a savings account for use as a rainy day fund. That way if you have an emergency issue that arises which needs money to resolve then you are not tempted to rely on your credit cards. Which leads us onto what is probably the most important necessity and that is to destroy your credit cards. Failing to do this will more often than not put you in a worse position than you started in if you were to max them out again.

So the important message is to make sure that you do not get yourself into the situation where you are missing any payments. Once you get into that spiral it is ever more difficult to get out of.

Author Bio: Tom Dawson is A UK finance expert who can help arrange cheap home improvement loans and personal loans for any purpose. Visit the site today.

Category: Finances
Keywords: debt consolidation loans, debt problems, credit score, credit rating