Many people may be attempting
bad credit repair by setting themselves a strict budget and keeping on top of any bill repayments.
However, the rising cost of living and difficult national economic situation could be making this more difficult to achieve.
The Squeezed Britain report from the Resolution Foundation has found families on low to middle incomes face a higher degree of inflation than wealthier households.
This group is defined as people who are in full time work, but are experiencing a drop in the value of the wages in real terms and possibly struggling with tax credit restrictions.
People in this position are said to have a hard time setting money aside for the future, with less than £1,500 in savings on average.
Furthermore, their typical basket of goods is likely to cost around £427 more than last year as a result of inflation and pay freezes.
It was noted wages have fallen 4.2 per cent in real terms since this time last year, which might further exacerbate this situation.
Indeed, trade unions have called on the government to take advantage of the recent dip in inflation in order to ease the financial burden on families, as this consideration remains an issue for a the majority of people.
As many tax credit cuts are not due to kick in until April, when more are expected to be announced.
Despite these potential setbacks, it is still possible to build a
credit rating by ensuring bill repayments are consistently met on time.
The study predicted disposable income will not return to pre-recession levels until at least 2020, even if wage growth matches inflation.
More people may be turning to credit cards as a method of addressing this difficulty and these financial products can be a useful budgeting tool.
If payments are regularly met it can demonstrate to a lender the borrower is reliable and disciplined when it comes to their personal finances.
Posted by Tom Burroughs
