Ready for the economic upturn?
Recessions come and, eventually, go. This guide is designed to help you to get ready for the good times when they begin to roll once more.
Plan ahead
You might be cutting back at the moment but when confidence returns you’ll almost certainly want to pursue long-term goals that have been shelved for a while – recent research for the online credit monitoring service CreditExpert discovered that 75 per cent of us have either postponed or cancelled our most important plans, from buying a home or car to getting married and starting a family. Use the coming months to reassess your priorities and get your credit status into the best possible shape, so if you’re planning to borrow you can access the money you need to achieve your ambitions.
Get an overview of your finances
Before you can move ahead, you need to know where you are, so take time to go through your bank statements and check your credit report. This is the personal history of your credit accounts, such as loans, cards and utility contracts, and your repayment history. It gives you an instant snapshot of what you’ve borrowed and how well you’re managing. It’s free to see your Experian credit report with a 30-day trial of CreditExpert.
Learn from the past
Think back to when times were really good. Your best memories are unlikely to be of expensive shopping trips – it’s far more likely that your remember having fun with family and friends. Learn from that experience by looking through old bank and credit card statements to see how much you spent and whether it was, with hindsight, worth it. Then reassess your priorities to focus your spending on the things which matter.
Look for support
Homes and cars are the biggest purchases most people ever make. First-time home buyers may be able to benefit from the government’s HomeBuy schemes, so investigate what you need to do to maximise your chances. Homes costing less than £175,000 are also free from Stamp Duty until at least the end of 2009. Meanwhile, the government’s scrappage scheme for old cars that you’ve owned for at least a year could get you £2,000 off the price of a new one. You can find out more at www.direct.gov.uk
Claim what’s due to you
Many people are feeling the pinch but are not claiming all the benefits they qualify for. Make sure you get what’s due to you – it could help you get through the current downturn and see you in better shape when the upturn arrives. Try the benefits checker at www.entitledto.co.uk
Clean up your credit history
If you do need a mortgage or loan, lenders will look at your credit report when they decide whether to make you an offer and how much interest to charge. They want to see that you’re a responsible borrower, so a clerical error indicating something as minor as a missed repayment could make a real difference. Take time to go through your credit report carefully and if you think any entries are incorrect, query them with the relevant lender and ask for them to be amended – you’ll find contact details in your Experian credit report.
Make yourself attractive
Now your credit history is accurate and up to date, it’s time to make it look even better. Start by registering to vote at your current address – lenders check the electoral roll as a precaution against fraud, to see that you live where you claim you do. Close unused credit accounts – lenders take into account the total amount that you could borrow, not what you actually owe, so too much available credit could make you look overstretched. If you’ve neglected to close any joint accounts with a previous partner, you should do that too – if they get into financial trouble, their credit history could drag you down.
Pay your debts
It may seem bizarre but, with interest rates on savings so low, you could be better off if you focus on clearing high interest debts before you start to build up the fighting fund that will make your dreams a reality. You’ll liberate more money for everyday life in the process and your credit rating could also improve.
Save for a sunny day
If your debts are under control, take advantage of the recently-raised ceiling on tax-free ISA’s to shelter your nest egg. From 6 October, the over-50s can save up to £10,200 every year tax free and younger people join them from 6 April 2010.
Keep on top of your finances
Getting ready for the upturn isn’t a one-off, short-term project – it means making financial management part of your routine. Keep on top of your spending, invest time in researching your options and check your credit report regularly to see how well you’re doing – and where you can make improvements. You can see your Experian credit report online whenever you want.
Prepare to congratulate yourself
When credit starts to flow again, you could be at the front of the queue and ready to start your new life. Give yourself a pat on the back – and look forward to the future.
Check your Experian credit report for free,click here
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