I started Broke Girl in the City as a way to share top tips on how to lead a fabulous lifestyle in the city when broke. Ever since I left for University, I have been in debt. My credit score was at rock bottom last year. Yet I have managed to turn it around in less than 12 months. Being smart about credit is actually one of the most important things to do and yet we rarely educate ourselves about how to improve our finances.
UK in the midst of a credit crisis
The Guardian reported this year that the UK’s £200bn consumer credit was unsustainable and that a cash stripped society was in debt more than ever before.
Get Smart About Credit Day encourages you to take control of this very important aspect of your life and learn how to manage credit properly. There will come a day when it may be incredibly important that you maintain a decent credit score. Maybe you are struggling right now with credit card debt and can’t see the light at the end of the tunnel. You can do this. If I can, you definitely can. Being in debt can also cause long-term emotional stress, so we it owe it to ourselves to Get Smart About Credit.
History of Get Smart About Credit Day
Get Smart About Credit Day was established by the ABA (American Bankers Association) to help encourage young people to get a handle on their credit from the start. I don’t know about you, but I had no education about finances at school. My mother told me never to get into debt. However if you are destined for University, it means having to take out various loans. Debt is seems is an integral way of life from when we leave home.
It is important we educate people in schools about how to properly manage personal finances. However there is so much more many of us can be doing for ourselves – at any age. We owe it to ourselves to be more savvy about our personal finances and master credit so it doesn’t have a detrimental effect on our lives.
Get Smart About Credit Day is an annual event held the third Thursday in October where bankers visit local classrooms to share with students the “credit facts of life.”
Make Get Smart About Credit Day your opportunity to learn how to manage credit and not let it manage you.
Get Smart About Credit Day is a great opportunity to begin looking after your financial circumstances by looking at your credit. I finally paid off a 25k loan this year. Reduced my credit cards overall, which drastically improved my credit rating. Focus on doing one thing today rather than feeling overwhelmed by your finances.
I wrote an article about how I started saving £25 a week, which has to be the best advice I have ever given myself. When I started a new job this year, I had an emergency fund saved to get me through that first month at work. However, once I spent it I didn’t then restart the savings programme. So I am setting side time today to putting this back in place and look at more long-term savings plans rather than relying on credit.
10 ways to improve your credit score
To summarise, a higher credit score means companies see you as a lower risk, so you’re more likely to be approved for credit. A high score indicates you have a history of managing your credit sensibly and making repayments on time. If you have a low credit score, you can change this over time. Check out our 10 ways to improve your Credit Score below.
Personal lending and credit cards has seen a dramatic rise this year. However, don’t get into the trap of maxing out your credit cards and then only paying the minimum interest. Believe me, I have done the very same thing and it takes a very long time to break this cycle. It’s a very expensive way of mismanaging credit. The only way I did it was to pay off my loan and then start chipping away at one card at a time. Only then I could then start overpaying another. It takes time to get out of debt once in debt, so managing your credit is key.
Join MoneySavingExpert Club for free
Another great tip: I joined the MoneySavingExpert club which monitors my credit rating on a monthly basis. Not only do I get this for free, but I managed to change my transform my credit rating. It went from the worst it could be to very good within less than a year. Just by managing my credit better.
Pay Day Loans
In August 2018, super giant of the pay day loans Wonga fell into administration. MoneySavingExpert’s Martin Lewis had been warning off people for many years. To many people who felt they couldn’t get credit through any other route to cover last minute expenses or get through a shortfall, these pay day loans felt like a godsend. However the interest was just phenomenal. In 2012, a £1,000 pay day loan needed to be paid back the following month with £1,312.94.
Under a wave of customer compensation claims, their business model in threat by their interest rates being capped by Ministers and despite a cash injection of 10m by investors, Wonga finally went under. If you have a loan with Wonga you will still need to pay it back but they are no longer accepting new applications.