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Tackling your debts

9 million of us avoid applying for things in case we fail the credit check

Posted 28 May 2013

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New research from Debt Advisory Centre has found that a poor credit rating can affect many different areas of your life.

 

We explain people's attitudes towards borrowing and credit ratings, and suggest different options for those wishing to improve their credit rating. 

It seems we're a cautious bunch when it comes to our credit ratings. 9 million people in the UK (18% of us) avoid applying for products and services because we're worried about failing the credit check.

 

We're perhaps a little more cautious than we need to be - as 7 million credit applications were rejected in the past year. This is 2 million lower than the number of people who are worried about failing a credit check.

 

The highest number of rejections were for personal loans (1.6 million), credit cards (1.2 million) and overdrafts (0.9 million) in the last year.

However, Debt Advisory Centre found that a poor credit rating doesn't just affect applications for credit. In around 7.3 million cases over the last 12 months, people found that their credit rating stopped them from benefiting from other products and services too, such as:

 

• Bank accounts (2.3 million people were rejected)

• Mobile phone contracts (1.8 million)

• Rental agreements (1.2 million)

• Jobs (1.1 million)

• Home or car insurance (0.9 million)

 

People appear to worry less about their credit rating as they get older. 25% of the 18-24 year-olds in our research said they avoided applying for credit or other services (due to worries about being rejected), compared with 11% of over-55s.

What to do if you're worried about your credit rating

Debt Advisory Centre suggests four things to help you if you're worried about your credit rating - or if you want to improve it:

• Avoid any further borrowing - you don't want to make matters worse

• Set up Direct Debits to ensure that payments go out on time

• Request your credit file from a credit reference agency so you can see how healthy your credit rating is for yourself. Make sure to correct any mistakes there may be.

• Seek appropriate debt help if you need it. If you clear your debts, you can focus on improving your credit rating in the future.

 

Debt Advisory Centre is here to help anyone struggling with debt. Click on the links to find out more about following debt solutions:

Debt Management Plans

Individual Voluntary Arrangement (IVA)

Debt Consolidation

Debt Relief Order (DRO)

 

by Emily Bancroft

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.