Adulting · Money

How Does A Poor Credit Score Affect Your Day to Day Life?

Everyone should know the importance of sound money management and the detrimental effects of having poor credit. Sadly around 18 million brits are currently thought to be actively harming their credit score and risking their financial future.

How Does A Poor Credit Score Affect Your Day to Day Life?

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Recently the economic downturn due to the Covid pandemic has seen the increased strain on people’s incomes and has resulted in more people missing payments or falling behind with their prices on credit accounts due to reduced revenues or increased bills eating into the money they have.

What Is A Poor Credit Score?

There are two main credit agencies in the UK and a list of variables that make up whether or not al ender accepts your credit application. On Experian, anything under 800 is classed as poor, and 720 and under is very poor. Equifax rates poor credit scores as those with a score of 420 or below with very poor from 0-279.

How Does Poor Credit Affect Your Day to Day Life?

Whether you realise it or not, having a poor credit score can affect more than a simple yes or no for applications you make. The effects can be wide-reaching and have an impact on many different things in your life. However, having poor credit now doesn’t mean this is it for you. You can always change your score and work to improve it by keeping on top of payments. You can follow money bloggers, listen to a credit risk podcast or join forums to get inspiration from others on how to improve your credit score.

This post looks at some of the ways a poor credit score can impact your life.

Renting Accommodation

If you have a good credit score, you can have your pick of homes to rent. Because many landlords and letting agencies conduct credit checks before allowing you to move in, having a poor credit history could jeopardise your plans to relocate.

The prevelance of ‘comprehensive’ credit checks from companies such as Experian has made it possible for landlords to check your financial history before you move in. Over six years, they look for any financial mistakes, such as a CCJ or defaults, that may have occurred in your life.

This isn’t just restricted to those applying for a mortgage now. Everyone is aware of how a poor credit history and bad financial mistakes can stop you from getting reasonable mortgage rates or even a mortgage at all. But a poor credit score also affects your renting ability too.

Buying A New Car

Buying a new car isn’t cheap. Many people consider financing their new vehicle with a personal loan to spread the cost over a more extended period. Personal loans are typically subject to a credit check. The same is true if you choose to go the traditional route and secure a PCP or hire purchase deal through a car dealership, in which case your credit would also be checked.

For the most part, if you’re entering a financial agreement with a company – whether it’s to finance a new car, a new sofa, or anything in between – you’ll almost certainly be asked to provide information about your credit history.

Applying for Jobs

If you apply for a job in specific industries – for example, if you’re involved in financial transactions or cash handling – the employer may run a credit check on you before extending you the offer. This is solely due to the nature of the employment you’re seeking, and it is not a common practice in the recruitment industry as a whole.

Careers that require good credit include;

  • Accounting
  • Police
  • Army
  • Legal

Higher Interest Rates

The better your credit score, the lower your interest rates will be. Lower rates and a good credit score means you are more likely to pay back what you owe on time as per your contract. A lower credit score is reflective of missing payments and bad financial decisions. So frequently, lenders will offer a higher interest rate to mitigate the risk of lending. Meaning, you are paying more money back as a buffer in case you default.

Insurance Premiums

Do you have household or car insurance? Or how about life insurance? All the insurance premiums you are offered will be based in part on your credit score. Much like with loans, the more chequered your history, the higher your payments will be. If you are paying a lump sum upfront, you can usually eradicate this. However, if you make monthly instalments, you are being credited the insurance premium you are paying back, thus accounting for the higher interest rates or increased premiums.

Household Bills

Whatever your mobile phone tariff or utility bills, if you’re looking to set up a Direct Debit to pay your bills, it’s likely that your credit report will be scrutinised as part of the process.

When it comes to paying your bills, you’ll most likely have no issues whatsoever. If, on the other hand, you have a poor credit history – for example, if you’ve defaulted on a loan in the past – your utility company may require you to have prepayment meters to avoid running up bills meaning you end up paying more than direct debits.

New Relationships

While this might not be a make or break topic for new relationships, it can impact budding relationships, especially if you haven’t gotten your financial situation under control. People want to know what type of person you are embarking on a relationship with and your credit history and money habits play a big part in this. If you have experienced financial difficulties you have recovered from, you may find this isn’t an issue. But if you are exhibiting poor financial choices and errant behaviour as far as your credit is concerned, this can be a warning flag in a new relationship.

On the face of it, a poor credit score can simply look like being refused credit. However, suppose you fail to make amends and improve your credit score. In that case, you may find that you are experiencing the effects of this in other areas of your life, such as getting preferable energy rates or being able to advance your career or maybe even pursuing a new relationship.

Life · Money

My Bucket List (The Lottery Win Edition)

My Bucket List (The Lottery Win Edition)

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Unless you’re already completely loaded, you’re probably like me and spend a fair amout of time thinking about what you’d do if you won the lottery. Aside from the obvious ones of buying a house and going on holiday, there are a few things that I’d love to do and so I thought it would be fun to share a few of them with you today:

A New Motorhome

Husband and I absolutely LOVE the idea of buying a new motorhome and spending time travelling around, seeing the UK and Europe. We’ve spent many an hour online looking at everything from top of the line Winnebagos to old converted school buses that people have made into the most incredible mobile homes and it’s something that would be really high on our list, should we win the lottery.

A Greener Car

I wrote a blog post a few years back about how “saving the world” seems to be reserved for the middle and upper classes, as they’re the ones who can afford to buy greener cars, install solar arrays etc. and I still feel that this is relevant now. We’re currently using my Dad’s car while we’re saving to buy our own, but it’s unlikely to be an eco-friendly electric model, so if we won some money I’d definitely be investing in an electric car.

A Treehouse

This one might sound absolutely bonkers, but I’ve always had a thing about houses in trees! I don’t know if I’d want to live in one full-time, but if we had a big house with a decent bit of land and some big trees, I’d definitely get someone to come in and build us a super treehouse for fun camp outs and even to have family over to stay in!

My Own Book

Bear with me here, again, I know this sounds strange! I’ve been in the process of writing a children’s book for a couple of years now and once I finish, I’m hoping to get it in front of the right people to get it published. However, if I had the money, I think I’d skip this step altogether and just self-publish and distribute it without a third party. It would be a lot easier and I wouldn’t have to deal with the inevitable rejections from editors!

An Education

I started my OU degree back when Sausage was a toddler but between life getting busier and tuition fees TRIPLING since I started, it’s been well and truly shoved onto the back burner. If I have the money, I’d start some sort of course just for the fun of learning. We all focus on education being a gateway to a career, but wouldn’t it be nice to just pick something you’re interested in and learn all about it?

What would you buy if money was no object after a lottery win? Leave me a comment below, I’d love to hear your ideas.

Finances · Money

5 Inevitable Costs You Must Be Prepared For

Keeping your finances on the right track is always going to be a matter of making sure that you are preparing for the worst even when you are hoping for the best. Here are some inevitable costs that you probably won’t be able to escape in your life. 

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A Funeral

Though it might seem peculiar, we can start with the very last cost that you will need to think about that is completely unavoidable. What makes this cost special is that you won’t be paying the price. Instead, this will fall to your dependents. That’s why, believe it or not, a lot of people once they reach a certain age, will set up a funeral fund. This is designed to pay for all the costs of a funeral including the casket, tombstone, funeral photography and even plots of land. It might sound morbid, but it’s something that you might eventually want to think about. 

Children’s Education

You could also think about the cost of your child’s education. Now, it’s worth noting that you are under no obligation to pay for the costs of your child’s higher education. However, this is something that many parents will aim for to help their child avoid unnecessary levels of debt later in life. If you are worried about the cost, then it’s recommended that you do think about looking at the average cost that you will need to pay for your child’s college tuition. This will help ensure that you can set a saving goal. You should also look at savings accounts and investment opportunities that will ensure you can quickly grow these funds. 

Home Renovation

It’s also worth thinking about the cost of a home renovation. You might think that you can avoid this cost, but don’t be so sure. If you buy a home, then at some point, you will need to complete renovation work. Renovating your home will mean that you can deal with issues related to wear and tear that will limit the value of the property overtime. 

It can also ensure that your home continues to be a safe and comfortable place to live for you and your family. This means that you might also be able to avoid selling your house to move to another property. Instead, with the right renovations, your house could become a forever home. It might also be worth thinking about emergency renovations that you might need to complete. There are lots of examples including flooding damage that will need to be corrected without any delays. 

Retirement

Next, you should think about your retirement. It’s never too early to start thinking about saving for your retirement. In fact, experts agree that you should be putting money away for your retirement as early as your twenties. In doing so, you can guarantee that your retirement does not catch you by surprise. Don’t forget, once you retire, you won’t have a fixed income to fall  back on. As such, you will need to make sure to save enough money overtime to afford everything that you want during your retirement. This could include a trip around the world or something more practical such as care facilities when you begin to lose your independence. A financial planner will explain exactly how much you need to save for your retirement plan. 

Transport

Finally, if you have a family, then you likely will need to consider the cost of transport. Most people will want to buy a car at some point that is large enough for everyone in the household. This can be quite an expensive purchase and, similar to a home, a choice like this probably won’t fit squarely into your budget. Instead, you need to make sure that you look at other options. You can save up the money to buy a vehicle. Or, you can think about purchasing a vehicle on finance. If you purchase a vehicle on finance, then you can make it easier to afford over an extended period. If you live in a city you might want to skip the car purchase and instead rely on public transport. It’s a great way to keep things cost friendly. 

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You can also think about purchasing a car second-hand rather than brand new. This is another way to save and spend less overall. 

We hope this helps you understand some of the key costs that you do need to be prepared for in the future. By recognizing that these costs are somewhat inevitable, you will be able to make sure that they don’t catch you off guard.

Driving · Money

The Benefits of Car Leasing

The Benefits of Car LeasingWhen it comes to being a motorist, there are a lot of expenses to consider. Aside from the initial purchase price of a car, there’s the tax, insurance, MOT costs, maintenance, fuel…it all adds up. There are, however, cheaper ways of running a car, such a leasing, so we’ve teamed up with Car Lease Supermarket to talk to you about all of the benefits of leasing a car instead of buying outright. Here are a few of them:

You’ll Get More for Your Money

When you lease a car, you usually find you’re driving a better vehicle than you would if you had bought one. This is because, with a car lease you only pay the car’s depreciation for the lease period, not the value of the car (because you don’t own it). As a result, your monthly payments are usually lower compared with other forms of finance, so you can lease a better make, trim or option.

You’ll Always Have a Newer Model

After the initial lease period ends, you will be able to exchange the car for a brand new vehicle. This means that you will be able to reap the advantages of having a new car on a regular basis, allowing you to get the maximum benefits of fuel economy, performance and safety. It also means that you will be able to avoid massive depreciation costs, as you do not own a vehicle that is likely to be rapidly losing value.

You’ll Reduce Your Monthly Outgoings

Apart from fuel and insurance, when you lease a car you know exactly what motoring is going to cost you because your expenses are rolled into one – monthly payments, Road Tax and breakdown cover. And if you include a maintenance package, your ability to budget becomes even stronger because you’ll know what’s going out of your account all in one go.

Cheaper Maintenence

Leasing provides much lower maintenance costs than other forms of buying. This is because the person leasing the car does not retain ownership, so general maintenance costs are covered by the manufacturer’s warranty period. If the car being leased requires servicing or repair, the costs will be covered; this usually includes tyre and exhaust replacement.

No MOTs to Remember

Generally speaking, lease car are less than a year or two old, and cars don’t need to be MOT’d until they’re three years old. This means that it’s unlikely that you’ll ever have to worry about MOTs with a lease car because you’ll have upgraded to a newer model before it’s even due.

Bonus Tip

If you really don’t use a car that much but still need one to get around occasionally, why not think about using All Transportation Network to book reservations for chauffeured transportation? You’ll be travelling in serious style and saving yourself a whole lot of hassle.

Money

Tips For Helping Your Children Learn About Money

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One of the best things about being a child is that you don’t have the responsibilities of an adult – including the financial ones. Yet while it is nice to leave our little ones in the ignorance of bliss, it can also be a real blessing to them in later life if you teach them about responsibilities as soon as you can. If you are good with money, then you will have a lot more control over your life, more freedom to do what you want to do with your life, and also the flexibility and fewer constraints with your choices in life. You will be able to go on more holidays or have the luxury to quit your job if you don’t like it and live off your savings while you search for a new one. The benefits from having financial stability really are innumerable.

This is why it is a good idea to teach your children about money and how to save from a young age. They should grow up with a better understanding of finances and be on a more solid foot in their adult life. You can teach them about everything from how to save, what a mortgage is, and about Safety Net Credit should they need it (perhaps this is also something that you have experience with, so can impart this wisdom too.) Here we have put together some top tips for helping your children to learn about money.

Give them a budget and see how they spend it

It is a good idea to give your child some pocket money each week or month and then see how they spend it. Take them out shopping and let them purchase things that they think are important or that they need and see what they spend their funds on. Remind them that once that money they have is gone, they will have to wait another week or money before they get any more. If they ask for extra, don’t just give it to them. Instead, see if they can earn it through doing jobs around the home. This teaches them that in order to get more money they will have to work for it – it doesn’t just magically appear in front of them when they need it.

Teach them about the value of things

As a child, it can be hard to learn the different values of things and this can be a skill that when taken into adult life, leads to people getting into large amounts of debt. To avoid this, teach your child about the value of things. Explain how the same item (such as TV, cars, or even fruits and vegetables in a supermarket) can vary greatly in price. Explain why this is and the differences between them. This should help them to learn the value of items. You could also play a game where they have to guess the prices of items before you show it to them. They might be a bit surprised at some of the answers – and you might be a bit shocked at some of their guesses! If you play this game each time you go shopping, see how they improve and soon have a better indication of the value of things.

Let them earn money by doing household chores

As an adult, the way that you will earn your money is through doing work. Teach your child when they are young this lesson by giving them jobs to do around the house in exchange for money. You could set different tasks at different prices, for example, they get money for washing up, for hoovering, for tidying their bedroom or for washing the car. By showing them this is the best way to earn, they will learn that the harder they work, the more money they can potentially earn and it will also be a good way to teach them responsibilities too. 

Lead by a good example

Children pick up habits from their parents – both the good and the bad ones. This is why it is so important that you lead by a good example. Try not to take them fun shopping all the time and show them that there are just as many other fun pastimes. Try not to be super frivolous with your cash, purchasing items such as fast fashion pieces that you wear a few times and then either breaks or you get rid of as you don’t like it anymore. If your child asks you questions, be as honest as possible with your answers and explain about credit, debts, and overdrafts so they know about these.

Have your child come with you to open up a bank account

A bank account is something that your child will have right from when they are a little child up through their adult life. This is why you should take them to open up their own account when you can. There are a host of accounts out there that are tailored for children, where you can put in a budget each week or month and it is restricted with what they can use it on. They also can’t have things such as an overdraft. If you put money into their account and teach them how to use their bank card, they will learn the value of money digitally. They can even have an app that shows them what they have spent – something that you could go through with them each week, showing them further the value of money and what their spending habits are. 

These are just a few ways that you can help your children to learn more about money and become spending savvy. It is very important that your child is as financially secure in the future as they can be and by following these top tips you know that you are setting them up for as much success as possible. What are some top tips you do to ensure that your children are as financially savvy as possible? Let us know in the comments below!