Home | Finances | Financial Planning
When it comes to getting debt advice, it's usually a case of the earlier, the better. Anyone who has had any long-term debts will know how quickly they can grow. In practice, so long as you ensure that you are making all your payments on time, you are less likely to face any problems. But as soon as you miss any payments, the debt can begin to 'snowball' - and that's when debt problems can really start. Why is paying on time so important? Your credit rating could be affected Every time you do anything with credit - whether it's a loan repayment, an application for a credit card or a missed mortgage payment - it will be recorded on your credit history, which is tracked by the three major credit reference agencies (Equifax, Experian and CallCredit). When you apply for credit, your potential lender will look at your credit history, as well as your circumstances (e.g. your salary and job) and assign you a credit rating based on what they see. If the lender can see that you have always made payments on time, then your credit rating is likely to be good. If you have missed some payments, then your credit rating will be worse - and this could affect your ability to obtain the credit you're looking for, and/or it could mean you will be required to pay a higher interest rate on future borrowing. Debt can grow As long as you are making each repayment in full and on time, your debt should not grow - each payment you make should go towards reducing it. However, it's when you begin to miss payments that the problems can start. Because the interest you are charged is usually based on your balance at a certain point each month (or every day in some cases), missing payments will mean you are charged more in interest, and this will mean you pay more in the long run. Of course, the interest alone is unlikely to make a significant difference to your ability to repay smaller balances, but if you owe a significant amount of money, then the interest can really add up. You may also incur charges each time you miss a payment, which can add even more to your total debt. Get debt advice If you think you might struggle to make any of your debt repayments, then it's important that you contact a debt adviser as soon as possible. Your debt adviser may be able to help you reorganise your finances to make extra sure you can make your debt repayments, or they may be able to help you find a debt solution that can make your debt more manageable. This might not necessarily protect your credit rating from harm, since you may not be repaying your debts under the original terms, but it could prevent (or limit) any further damage. There are debt solutions available for people in various circumstances, with different levels of debt. Even if you do not think you will ever be able to repay your debts in full, your debt adviser may be able to help you clear your debts and avoid bankruptcy.
Article Source: http://articlebridge.com
For more debt advice and information on debt solutions such as debt management & debt consolidation visit www.debtadvisersdirect.com
Please Rate this Article
5 out of 54 out of 53 out of 52 out of 51 out of 5
Not yet Rated
