6 Common Mistakes People Make When It Comes To Credit
At some point in life everyone is bound to fall into money troubles and bad finances. It’s also easy to become stuck in a rut, but all is not lost and there are ways to help you regain your financial status. The main thing is to become self aware and steer clear of the leading mistakes made with money. Forward Finance has put together 6 common mistakes people make.
People don’t understand how important it is to set themselves budgets in everyday life , whether it be for your weekly shop or buying a new car , in today’s society it’s so easy to overspend and splurge without even realising. People tend to spend what they don’t have and fall even further into debt planning and budgeting will help you ease getting back into a better financial state.
Living in your overdraft
Going into your overdraft month after month is such a bad move for anyone. People often think of their overdraft as having more money. That’s not the case, it’s just another debt. Yes overdrafts are handy but we would recommend only using them as emergency funds and paying it back as soon as possible. Overdrafts are debt and can affect your credit score. It’s important to have this knowledge so you can avoid damaging your finances even further.
To much interest on current debt
Debt consolidation is an option now this simply means more than one loan is rolled into one whole debt , doing this could lower the interest you pay and help you pay off existing debt quicker. Higher interest can be a nightmare as sometimes when we can only afford to make a minimum payment you are actually only paying off the interest and not the actual debt which can become disheartening. If you can afford more than the minimum payment then pay more whenever you can you will eventually see your debt decrease.
Monitor your credit score regularly
A lot of people don’t realise how important it is to monitor and improve your credit score. Lenders and creditors use this whenever you apply for credit. You can sign up to Clear score for free to check your score and check for any mistakes that may be affecting your score. It’s important to keep things such as your address or any financial connections up to date. Your score is looked at whenever you apply for things like loans , mobile phone contracts or credit cards. Make sure you make payments on time because they can also show on your score for up to 12 months.
Try and pay in to your savings
Times are tough and we’re currently in the middle of a massive cost of living crisis. During covid 19 statistics from ONS prove that more than 39% of people were able to contribute to their savings. If you can try to save a little every month, set yourself a goal and a timeframe that is achievable and you will soon see your savings increase.
Planning for the future
Financial planning for the future is also very important, but you can refer back to that on our website as we have a full page dedicated on how to financially plan for yours and your loved ones futures.