t’s possible you have lost a little control of your finances in the past two crazy, years. It is very possible it’s not your fault. But it’s time to regain control!
Here are our best fixes.
Ditch your credit card
If that credit card balance has been creeping up and up every month, rather than you are able to clear it, it’s time to act.
You can currently get a 0 per cent balance transfer, which allows new credit card customers to pay no interest whatsoever on a debt they shift across, for a period of up to 36 months.
These cards give you a window of opportunity to have every dollar you repay come off your balance, rather than going in interest.
You can use a 0 per cent card to ‘zero out’ your debt by dividing what you owe by the number of interest-free months and doing your utmost to repay that amount each and every month.
If you can’t manage that, however, you could execute a second 0 % balance transfer, to a third institution.
But don’t move more than twice because it will impact your credit score too much.
Which leads us to …
Repair your credit rating
If you took a loan holiday when the pandemic exploded, hopefully you don’t have those repayment pauses marked on your history? However, you might. And you very likely will if you struggled to pay any other credit or utilities bills.
Any late credit payment or utilities default will reduce your credit score and affect your ability to get a loan - and even a phone - in the future.
Check your full credit report - which now also includes your credit score itself - and double check. You can get this by simply giving us a call or dropping us an email.
If there are errors in your report, it’s actually happy days. These can be corrected with those agencies themselves.
Late credit payments will automatically drop off your record and stop hurting you after a two-year wait.
Any utilities or other bill defaults will suppress your score for five years.
In this case, it’s a waiting game. Just don’t make the mistake, as I alluded to earlier, of applying for too much credit in the interim - that will drive down your ‘magic’ money number even further.
And beware of using buy-now, pay-later (BNPL) services, too. An enquiry is said to instantly push down your credit score by 150 points or more.
Besides, on a day-to-day basis, it’s simply too easy to lose track of what you rack up with BNPL, particularly if you have more than one service.
So, step away from Afterpay.
Confess your Sins
I know it’s the last thing you’d expect to be smart, but all credit providers must have dedicated hardship departments - so tell them if you’re struggling and they’ll cut you some slack.
If you know you’re not going to make a payment, don’t wait 15 days until it becomes a black mark on your credit report and is reflected in your score.
Call or email the provider and see what they will do for you.
Some lenders are still offering deferred repayments in 2022 or you might be able to get a temporary freeze on credit accounts for three to six months.
Just note that changes to credit reporting, applying from July 1 2021, mean you won’t be marked as ‘late paying’ under any formal hardship arrangement.
However, you will be flagged as having a ‘special’ arrangement, and any potential new lender will have questions.
That you had ‘hardship’ will be deleted from your record after 12 months.
And in a big positive, the arrangement can’t affect your credit score because the credit bureaux are prohibited from including this in their calculations.
Available through the National Debt Helpline, or by phoning 1800 007 007, an amazing local counsellor will go into budgetary bat for you.
They can advocate with your every provider for financial-hardship provisions. They can accelerate your case and assistance with Centrelink. They can even restructure your finances, so they are sustainable into the future.
If your situation is serious and stressful, get in touch today.
Build Buffer Fund
Bad things will happen. Cars ‘blow up’, fridges and washing machines break, emergency dental work is required, essential medical expenses occur.
You need a buffer of bucks to be able to cope and not have an urgent personal situation become an out-of-control financial one.
Slowly and surely begin to build a ‘buffer fund “so you are never again sailing so close to the (wealth) wind.
Having a cash stash equivalent to six months’ salary is ideal. But any amount could help.
And if you have a home loan, house this in an offset account attached to that loan. This will save you lots of juicy loan interest on the way.
As we hopefully put the global health crisis behind us, it’s time to get healthy finances again.
Your Choice Mortgage Brokers Pty Ltd ATF Halo Innovation Trust trading as Heart Mortgage Services - Australian Credit Licence 38643.
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