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Repairing a bad credit history
Have you got a sackful of unopened bills and creditors' letters hidden under the bed? Have you got into a deadly cycle of borrowing more and more to repay existing debts?
Give yourself a break and stop running. The problems won't go away, they'll just spiral. If you don't want a history of bad debts to ruin your credit rating, you must tackle the situation head-on.
So how can you begin to break this awful cycle? Here are some dos and don'ts:
Devise a repayment plan. Work out a budget, showing how much you need to live on. The amount left over is what you're going to use to start paying off your debts.
Prioritise. Some debts are more dangerous than others. Sort them out first. Top-priority debts include: mortgages and other loans secured on your property; rent; council tax; County Court Judgments; electricity and gas; tax; hire purchase debts; TV licence.
Write to your creditors. They'll be delighted to hear from you at last. Tell them what you propose to do. Enclose the first month's payment, plus a copy of your budget plan, so they can see what you're spending money on.
Be realistic. Pick a figure you know you can afford. If you can afford only a couple of pounds, that's what you pay. If lenders demand more, tell them they can't have it and stick to your original plan, sending payments regularly each month.
Seek help. Various organisations offer free advice to people struggling with debt. They include: local Citizens' Advice Bureaux; the Consumer Credit Counselling Service (0800 138 1111); National Debtline (08459 500511); Debt Help UK (www.debthelpuk.co.uk).
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