Change your lifestyle to get good credit report, advises expert

People who have had their credit card applications turned down should re-evaluate their lifestyles and have a close look at their finances, Fool.co.uk has said.

David Kuo, head of personal finance at Fool.co.uk, said that people are often refused credit because they have too much debt compared to their income or because they have previously defaulted on credit card or other payments.

Earlier this month, MoneyExpert.com reported that 18,000 credit card applications are being refused every day and one in 14 people (seven per cent of the population) have had a credit card application rejected in the last six months – a total of 3.24 million applications.

According to a new survey by Citizens Advice, record numbers of people are seeking help with financial difficulties and many are struggling to pay their essential household bills.

“People need to re-evaluate their own lifestyles at the moment, have a look at their own finances and if someone turns you down for a credit card then ask yourself: ‘Why?’ The answer is in your credit report,” says Mr Kuo.

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IVA not always best solutions, says expert

An individual voluntary arrangement (IVA) is not always the best solution for people facing crippling debt, according to a financial expert.

IVAs are seen as an alternative to bankruptcy, allowing people to settle their debts without damaging their credit rating to the same extent, however there are also drawbacks.

With an IVA, people are tied into paying their creditors for a period of 60 months, or five years. If they fail to make a payment, the arrangement can be withdrawn.

“Many people who take out an IVA initially go in with the intention of paying off their debts, but because it is so onerous they eventually fail anyway,” says David Kuo, head of personal finance at Fool.co.uk.

Record numbers of people are seeking help with debt concerns, with more than 215,000 new debt problems being reported in the first two months of this year, according to a new survey by Citizens Advice.

Mr Kuo noted that around 120 people are having their homes repossessed each day and that these were the most likely to be vulnerable and considering an IVA.

However, he said that in some cases it is best to declare bankruptcy from the outset.

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