Debt consolidation is a form of debt management that allows you to organize and streamline your financial obligations helping you to avoid the more serious consequences of financial defaulting which could lead to bankruptcy. The concept behind debt consolidation is straightforward – you use one loan to pay off all your other debts and loans, leaving you with only one monthly payment and interest rate to take care of. This positively contributes to your credit score by allowing your current accounts, regardless of status, to be considered paid. You are also opening another account, which, if you keep up with your payment obligations, will actually serve to boost your previously faltering credit rating.

In order to gain control over your financial obligations, you need to do your research and find the right debt consolidation company to work with. Learn as much as you can about the company and their debt removal process. Ask for references from people you trust, and go online and check consumer reviews. Planning pays off so think longterm.

Before deciding on a debt consolidation plan, you need to get your financial affairs in order. Make a list of all the debt you want to include in the debt consolidation plan. Include creditor information, contact information, monthly payments, interest rates and current balances in this list. This will give you a better understanding of the amount of debt you have, what you need to clear and how long the process is likely to take. This can be difficult as seeing the actual amount could overwhelm you. Many people know they are in debt, but are in the dark as to how much they actually owe as the interest rate calculations are usually found in the small print down the bottom.

If you are looking for a way out of debt without seriously hampering your credit rating and score, debt consolidation may be the right choice for you. Debt consolidation is a smart alternative to getting out of debt while still maintaining a relatively good credit report. It can even give your credit rating a boost if handled in the right way.

Once your debt is cleared, your finances will take on a whole new look. Your credit score will be recalculated, thus reflecting a new, positive status and boosting your credit score. This credit score boost will serve as motivation to maintain this new and improved credit rating. You are now able to start afresh, understanding the implications of your spending habits and it gives you a future platform from which to monitor and control your spending levels.

Managing you debt requires you to take control of your finances and the first step to taking control of your finances is drawing up a realistic budget. This budget will take into account all of your income and your total outgoings. Once your budget has been worked out, you can use it to plan your way out of debt. Together with a specialist debt advisor, your budget will help you to find the best debt solution to suit your personal financial circumstances. When it comes to tackling debts, a thorough, reasonable budget will allow you to take them on with confidence.

There are other pointers that will help you to tackle outstanding debt in the early stages. Of course, it’s never too early to talk to a debt advisor, like Debtsolver. If the situation isn’t as bad as you think it is, they can simply provide you with a much needed confidence boost, letting you know that you’re moving in the right direction. On the other hand, it could well save you from an unforeseen debt disaster.

To start with, any savings that you’ve managed to accumulate probably won’t be earning you the same in interest as the outstanding debts are costing you; so pay off what you can afford. Same goes for any windfalls. If you’re facing debt problems, don’t just think about it as easy come, easy go; it’s a valuable resource in the fight against debt.

Of course, if you don’t have any savings, you haven’t been lucky enough for a windfall and you can’t find a second job, you need to cut down on your expenditure. Start with all of those little luxuries, like cappuccinos and dining out. If you’re looking to deal with your debt, try cutting out the credit and going cash only. Try putting yourself back on pocket-money.

If you feel that managing your debt is becoming more of a problem, you should take steps to bring your finances under control before you find yourself in severe debt strife. Sticking to a budget and using cash rather than credit will help you manage your budget more easily. Ultimately, your credit cards will be the most tempting credit stream in these circumstances. After all, it’s very tempting to give in to the buy now, pay later philosophy. Here are some tips to help you avoid the potential pitfalls associated with credit card debt.

• Obviously, your first step should be a straightforward one; stop using your credit card.

• We know it’s not that straightforward though, so destroy all but the one with the lowest interest rate and save for emergencies.
• Pay off anything that you do spend each month and avoid paying any interest.

• Stick to the budget you’ve drawn up. That means cutting out the impulse buys.

• Store cards are one of the most expensive ways to borrow. Any in-store discounts could be quickly off-set by high interest rates.

First of all, shopping around for the bank account, or any other financial product, which offers you the best rates and benefits is a must. Sometimes the best deals are to be found in unlikely places. Supermarkets can offer accounts with competitive rates of interest as well as other benefits that probably aren’t available from your high street bank. The in-store reward points are just one of these additional benefits.

At one popular British supermarket, you have the option of paying into your savings account at the checkout. So, if the discounts in your weekly shop add up to a fiver, you have the option to transfer that fiver right into your savings. OK, it’s not going to change your life right away but little and often is the best way to do it.

If you like that idea, you’ll love this one. A high street bank is making it even easier to add to your savings little and often, by rounding up purchases to the nearest pound whenever you use your debit card. Naturally, this relies on you having both your current account and savings account with the same bank, which means you probably won’t get the most competitive rate on the market.

When it comes to getting your bank to work for you, setting up a ‘sweeping’ facility is a particularly good way to effortlessly add to your savings. The process of sweeping takes any spare funds that are left in your account each month and ‘sweeps’ it into your savings account. The crux of the issue is finding a savings account with as high a rate of interest as possible.

This is all very good for those with the funds to move around but what if you want your bank to help you to earn a bit of extra cash? We’re not just talking about interest on any savings you might have. A cash-back credit card will reward you for settling your outstanding balance at the end of each month. There are a few credit cards on the market that offer this service so shop around for the best deal.

If you’re dubious about signing up for a cash-back credit card, £100 cash in your hand will no-doubt be a more attractive prospect. There are a couple of current accounts on the market that will reward you with £100 when you open an account. Well, in order to qualify for the cash reward, there will be a minimum deposit amount when you open the account. This will vary from bank to bank so, as ever, it will pay to shop around. You can then take this free money and pay it into your savings account.

Looking to get into debt fast? Finding there isn’t quite enough pressure on your finances? Keen to get some more stress into your life? Probably not. Why then, do so many of us continue to make the same spending mistakes that are sure-fire ways to bring about a bad debt problem? Luckily, Debtsolver are on hand to flag up these top five steps towards bad debt. So, if you recognise your spending habits in there, you too could be headed for debt.

1. Do you spend more than you earn? This is the most straight forward route into debt and the one taken by most people. Although it might sound like an exercise in irresponsibility, this can be a relatively easy habit to fall into, particularly if your financial circumstances change. If your ability to work is limited, you are forced to cut down on the number of hours you work or are made redundant, your outgoings will not necessarily be able to immediately adapt to this change in circumstances.

2. Leading on from point 1, if you’ve been spending more than you earn, you’ve essentially been spending money that you don’t have. You are able to spend money you don’t have by using your credit cards, store cards and taking out loans. Falling into the habit of using these means to meet other credit repayments is a downward spiral to a severe debt problem. Even for those who are confident that a buy now, pay later approach is well within their means, a change of financial circumstances can soon land you in debt difficulty.

3. If you find that you’re getting into the habit of using credit to make your usual, day to day purchases, the interest applied can mean you’re paying over the odds for your goods. You should definitely try to stick to cash for these things. Obviously, using your credit cards is all about paying later for the things that you want now. However, it’s much harder to stay motivated and committed to a repayment plan when you’ve already consumed or used the ordinary, boring things that you’ve bought. It’s too easy to then just pay the minimum on your credit card, rather than pay it off each month. Then the purchases will definitely end up costing you more.

4. Similarly, if using your credit card still gives you the sense of getting something for nothing, you’re edging ever closer to a serious debt problem. What makes you think that you’ll all of a sudden want to pay for something more once it’s no longer so new and the shine’s gone off it? Using your credit card to make purchases when you actually have the cash is a mistake and if you want to avoid debt.

5. Taking on more credit to pay off your existing debt is the last in our list of steps towards a really serious debt problem. The first thing wrong with that concept is the idea that you’re actually paying anything off. All this achieves is shuffling debt around. Chances are that you’ll be picking up more debt as this goes on and your financial situation will be getting harder to solve. Free balance transfers can be a good idea for those that can afford to pay off the outstanding balance before any 0% period ends. It’s important to remember that the debt consolidation loan, although another form of credit, is not in the same category. It is debt solutions which helps a lot of people deal with their mounting debt problem and regain control of their finances.

In the UK, there are three credit referencing agencies that keep a file on every one who is financially active; Experian, Equifax and CallCredit. This file includes your personal information, publicly available information from the electoral roll and your credit and financial history. The Consumer Credit Act 1974 gives you the right to this information for an administrative fee of £2. So, if you have been refused credit, you can find out why and try to rectify the situation. Debtsolver are on hand to help you with this.

Maintaining your presence on the electoral roll is an important part of a healthy credit rating. These credit companies update their details from the electoral roll monthly so up to date records will quickly improve your credit score.

Don’t be afraid to challenge any information that’s wrong too. Even if your credit rating is good, you should still check the validity of your information regularly. This will also help you to catch identity theft early.

Missing payments, regardless of how trivial they may seem, can damage your credit rating too. Missed payments stay on your report for three years and might be a determining factor in your ability to secure credit. If you can foresee a missed payment, talk to the lender immediately. You may be able to arrange a payment adjustment or come to an agreement to pay the arrears at a later date. This could keep the blemish off your report.

You may feel that because you’ve never taken on any credit, your rating will be perfect. This is not the case. Lenders want to see that you can take on credit and manage it responsibly. At the end of the day, they earn by lending, so if you avoid credit, they might not see you as profitable.

If you have a credit card that offers reward points when you shop and you manage to clear the balance at the end of each month, your credit rating will improve and you’ll earn points towards your next shop.

Whenever a company looks at your file, without it necessarily being an unsuccessful credit application, it leaves a trace on your report. This can be helpful as it lets you know who’s been checking your file but it also lets any prospective lender know how often you are applying for credit. If they deem this to be too many, it can damage your rating. After being refused credit, don’t immediately move on to the next lender. Instead, talk to the company that has refused you and find out why. Before moving on to the next, try to fix the problem.

Any applications for joint bank accounts, loans or mortgages will tie you to the other person and they can affect your credit rating. This can linger on your report so have any former partners removed.

For further help in achieving a healthier financial situation or repairing your debt history, talk to one of the specialist debt advisors at www.debtsolver.co.uk.