Personal debt warning for 2017
Personal debt in the UK is on the rise, it is said that the average household now owes £12,887 this is before any mortgages are taken into account, however the stats do include student loans which are equally on the increase – this is according to the Trade Union Congress.
How will we cope with personal debt if the interest rates go up?
Despite the rising debt many professionals are telling us that they are not concerned as the interest rate is not looking to rise in the foreseeable future.
However, my concern for 2017 is the economic climate changing, the interest rate increasing, combined with the weak growth in wages. We are already seeing many families reliant on borrowing. Households are no longer using their credit cards for luxury goods but using them to pay utility bills and other general household bills, because they do not have enough income at the end of the month. If the interest rate does go up we are going to see a lot of households missing their repayments, and thus gaining themselves a bad credit score.
There are many statistics out there telling us about household debt, personal debt and borrowing. The only way this increasing debt can be changed is the
government doing more for working families who are struggling on their wages alone, and turning to card and short term loans.
Personal debt can lead to a bad credit score
Unfortunately, With the rising debt and even before any increase in interest rates, some people are really struggling to get a hold on their repayments, and many are allowing this to spiral out of control.
The best thing to do if you find yourself in a situation where you are struggling to keep on top of your payments is seek help. Do not ignore the situation as this will just escalate, the problem will not disappear, but does need to be dealt with.
There are many debt advice services available to us in the UK these include, Citizens Advice, National Debtline and Money Advice Service. You can also look at the government website search for ‘options for paying off your debt’.
Bad credit scores impact on your future.
Unfortunately, if you have a poor or bad credit score you will fall into sub-prime, which means that you will be paying more for any finance you apply for, this is because you are considered ‘a risk’.
At CVS Ltd we understand how frustrating this must be and it is for that reason we do not look at peoples credit scores when they apply for a bad credit car lease from us. We are looking at affordability and traceability as we understand that circumstance change hence we do not look at the past.
Do not ignore financial difficulties, seek help as soon as you feel you are unable to cope.
Getting a grip on your finances at an early stage will help you get back on track in a manageable way with a lot less stress.