Managing your finances to repair adverse credit

Reclining womanIt’s easy to find yourself with adverse credit, but what can you do about it? Applying for an adverse credit card is one way to build your credit rating (see how to improve your credit rating page) but you should also be thinking about addressing how you got into this situation in the first place.

Tips on how to manage your finances more effectively


For some people, adverse credit starts as a result of a one-off event, like divorce or a health problem which puts strain on personal finances, but for many others, adverse credit is a result of mis-managing personal finances.

Adverse credit is not as uncommon as you may think. The Citizen’s Advice Bureaus deal with over 5,000 people with debt problems everyday; average household debt (excluding mortgages) in the UK is over £8,000 and rising*. Rather than ignoring your situation and living with impaired credit and the complications it can bring, why not take a few simple steps to manage your finances better:

  • Set yourself sensible financial goals. Where do you want to be in 1 month, 3 months, 1 year and 3 years?

  • Write down your outgoings - the money you need to get by each month. Include all the essentials like mortgage/rent, council tax and utility bills, food shopping, travel to work.

  • Look at the money you have coming in; if it’s more than your outgoings, take the remainder and give yourself a budget to include on clothes, going out, paying off credit debts or building savings etc.

  • If the money coming in is less than your outgoings, think about what you can do to reduce your outgoings

    1. Why not search online price comparison sites for items you’re looking to buy, in order to get the cheapest price

    2. Search out the cheapest gas/electricity/water providers as you could make substantial savings throughout the year

    3. How about turning your heating down a degree or two to reduce your heating bill and at the same time help the environment

    4. Are there any non essential items that you can cut back on i.e. do you really need that extra pair of shoes?!

  • Or try increasing the money you have coming in;

    1. Maybe a new job

    2. Gain some overtime at work

    3. Can you turn an interest or hobby into an income earner

    4. Could you have a car boot sale and raise money from old knick-knack’s that you no longer need or use

  • If it all seems too difficult - get advice. Your nearest Citizens Advice Bureau will be happy to talk through your financial situation and advise you what you can do about your debts.

What not to do

Whatever you do, don’t ignore demands for money, credit debts, council tax bills or the like. This is the fastest way to end up in an adverse credit situation, which is often avoidable. If you are having trouble paying debts, always talk to the company or entity involved or get independent advice.

*www.creditaction.org.uk/debtstats.htm

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