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Give your finances a spring clean
Now that spring is on its way, you may be planning to get out the cleaning products and give your home a good going over from top to bottom. But what if your finances could do with tidying up too? Here are our top tips to help you give yourself a financial spring clean:
Start by de-cluttering: if you take a proper look at your finances, you may be surprised by how much money you spend on services you don’t need or actually use any more. Whether it’s a costly gym membership that you haven’t used since last summer or a Netflix subscription and all of your favourite shows have ended, you could be wasting money without realising it.
Get together all of your bank statements from the past year, or print them off if you don’t get sent physical copies. Then take your time to go through them all in detail, and put a ring round any outgoings you don’t recognise or that are for services you don’t need. Some subscriptions, such as Amazon Prime, only charge you once a year, so it’s important that you really do look back as far as a year so you can make sure you cancel anything you’re not using. With just an hour of rigorous statement checking, you could save yourself some money on wasted subscriptions.
Remember though, if you’re cancelling something like a gym membership, make sure you check your contract before stopping your direct debit. You may have signed up for a specific amount of time, or the gym might want a month’s notice before you cancel.
Tidy up your credit products: owing money on a credit card may seem like a breeze if you’re only paying the minimum payments, and it might not feel like a chore to afford your repayments every month. However, by only paying the minimum repayment, it could take you years to clear the bill and the interest will continue to build up, so you’ll end up paying off far more overall. Dedicate as much as you can afford each month towards paying off your credit card, and you could clear it in just a few months – saving you money in the long run.
You should also check if you could pay off any outstanding borrowing a bit faster by making savings on other areas of your finances. Just by cutting out a few of your daily coffees or weekly magazines, you could find that you can increase your monthly loan repayments by at least £10, and you could pay off your loan or perhaps clear your overdraft quicker. For more creative ways that you can pay your loan off faster, check out our guide here.
Air out your dusty credit report: if you’re guilty of only checking your credit report before applying for a mortgage or a loan, or maybe even not at all, you might not pick up on any problems for months or even years. It’s good practice to blow the cobwebs off your credit report and go through it at least once a year, so if there’s anything wrong, you’ll pick up on it before it causes you any difficulties with applying for credit.
Check that your address is up to date, as this is one of the first things that lenders look at when deciding whether to let you borrow. You should also make sure that your credit report doesn’t have any outstanding agreements on it that you no longer have, such as an overdraft or store card that you’ve closed. If you find anything wrong, make sure you contact the firms that holds your credit report – Equifax, Experian or CallCredit – and they should be able to update their records, or advise you on how to get the mistake fixed. If you want more information on getting your credit report up to date, we’ve put together a helpful blog here.
Get those old stains out of the woodwork: problems with your credit history in the past can affect whether you’ll be able to apply for a loan or mortgage in the future, as lenders will look at your credit report to judge whether you’d be able to repay any borrowing. Whether it’s a CCJ, late or missed payment, or you just don’t really have any credit history to speak of, it could all mean that some lenders may not let you take out any credit.
One of the best ways to improve your credit score is by showing you can manage smaller amounts of credit responsibly. For example, a ‘bad credit’ credit card, like the one available from Ocean, can help you with this, and you could be accepted even if you’ve been turned down somewhere else. Over time, this can help you become more likely to be eligible for other credit products, so if you decide to take out a mortgage in a few years, you’ll be able to get a more attractive deal.
Organise your finances: it can be difficult to see what’s going on with your spending if there’s no structure to your finances. With £20 on a cinema trip (by the time you’ve bought all your snacks) and another £30 on dinner out with your mates, you can easily get to the end of the month and wonder where all your money went, with nothing left over for saving.
By creating a strict budget (and sticking to it!), you will find it easier to see what you’re spending your money on every month and you’ll be able to identify areas where you can cut back. It also means that if you have any unexpected bills or expenses to pay out for, it should be a bit simpler to see where you’ll be able to move the money from to cover it.