Debt can often cause significant problems for families burdened with the responsibility of making regular repayments to eliminate this difficulty. While lockdown measures have brought with them difficult financial circumstances for many, there is the chance for the time spent at home to be seized to make more of a concerted effort towards tackling finances. Recent research has shown many Britons have chosen to take up this gauntlet, with Bank of England figures revealing a record amount of debt was repaid in the month of April.
Repayments soared to a staggering £7.4billion, the largest net repayment since records from the central bank began in 1993.
But for those looking to take the plunge to become more financially healthy, it is difficult to know where to begin.
He said: “People have been able to go out for dinner or to the shops lately, and at the same time many have made big savings on travel expenses, takeaway coffees and the like.
“This all boils down to a better understanding of where their money actually goes each month, and shows that changes big or small can have a dramatic impact.
“Overpayments on loans and mortgages have a snowball effect – offering future savings in interest.
“But even if overpaying isn’t an option, the pandemic has reminded many of us that a small amount of time spent on life admin – switching to a lower rate mortgage or a cheaper energy provider, for example – can have just as big an impact.
“Businesses and consumers alike have also learnt the perils of living hand to mouth, so despite low returns on savings, it’s important to make sure you have a buffer.”
Referring to credit score health, Mr Lily added: “Ultimately the best way to build up a strong credit score is by using credit responsibly.
“This can be done in a few ways; ensuring you pay your bills on time and aiming to pay off existing debt before applying for new credit are two simple ways to gradually build your credit score.
“For each individual, building a credit score can take varying amounts of time – for some this might be months, for others it can be years.
“Therefore, it is important to be consistent with your efforts in credit building over a longer period of time which will prove that you can be financially responsible.”
The government has also provided advice about paying off debts through its Money Advice Service.
Those who are struggling may be able to acquire a Debt Management Plan or Debt Relief Order to provide them with a support plan to meet debts.
But firstly, the government advises it is correct to pay off debts in the right order.
Priority debts, those which carry the most serious consequences if not paid, should be addressed first before other debts which may have accumulated for Britons.
Published at Fri, 12 Jun 2020 03:00:00 +0000