Personal Finance Help

On this page you will find answers to some of the most frequently asked questions on personal finance issues. If you have a question you would like to ask please feel free to contact us.

• How do I check my credit score?
• How many credit cards can I have?
• What is APR?
• What is the Periodic Rate?
• What is debt consolidation?
• What's the difference between a secured and unsecured loan?
• Can I repay a loan early?
• What Are My Insurance Needs?
• What should I do if I am having difficulty meeting payments on my debts?
• What is an IVA?

How do I check my credit score?

Different lenders have their own scoring systems so there is no fixed credit score for an individual. However, every time you apply for credit the potential lender will check your credit report with each of the UK's three credit reference agencies, Experian, Equifax and Callcredit. The credit report contains detailed information on your credit history, and includes matters of public record such as county court judgements and bankruptcies. This information stays on your record for six years. The report is used by potential lenders when assessing and deciding on a loan application. You can contact the credit reference agencies and request a Statutory Credit Report for a fee of £2.00, or take advantage of the agencies own free credit report offers. You should check your credit report at least once a year to make sure it is accurate, and really more frequently to protect yourself against the threat of identity theft. The credit reference agencies do offer low cost packages that help you monitor your credit report.
You can obtain free Experian credit report on our Free Credit Report page

How many credit cards can I have?

Theoretically you can have as many cards as issuers are prepared to issue. The real question should be 'How many credit cards do I really need'? Remember credit cards are not the cheapest form of credit if you are constantly juggling between three or four cards that are being used more or less to their credit limit all the time. If you are starting to feel you are under financial pressure, another credit card is almost certainly not the way to relieve it. Review your finances and look at ways of reducing rather than increasing your debts.
You can compare and apply for a credit card on our UK Credit Cards page

What is APR?

APR stands for annual percentage rate, and this represents the interest charged on the outstanding balance on your account, expressed as an annual figure. The APR is quoted as part of the terms and conditions related to specific credit card offers to make it easier for you to compare them. APR can be applied to your account on a variable basis, meaning it can move upwards or downwards and this can affect the cost of credit.
You can find other frequently used finance terminology explained on our Financial Glossary.

What is the Periodic Rate?

When your bill is being calculated each month interest is charged on the outstanding balance at a rate of 1/12th of the APR that applies to your account.
You can find other frequently used finance terminology explained on our Financial Glossary.

What is debt consolidation?

Debt consolidation is the term that describes bringing your debts together. The way it usually works is that an individual with a group of loans that is perhaps becoming difficult to service takes out a new loan and uses the funds to clear all the others. This leaves them with a single manageable monthly payment. While it may seem an attractive idea, the borrower can end up paying more for their credit overall. The lump sum borrowed to clear other debts can be quite substantial, come with a high interest rate and be payable over an extended period.

What's the difference between a secured and unsecured loan?

A secured loan is linked to your assets and gives the lender the right to sell your home or other property to recover your debt to them if you default on payments.
An unsecured loan is not tied to any collateral but they are generally only offered to homeowners with a good credit history.
You can compare different loans on our UK Loans page. You may also consider visiting our Loans Guides page for more details.

Can I repay a loan early?

You generally can repay your loan as soon as you choose. However, with many loan agreements a penalty is charged for early repayment. Always read the small print before committing to a loan.
You can compare different loans on our UK Loans page.

What should I do if I am having difficulty meeting payments on my debts?

The most important thing is not to ignore the situation and hope it will go away. Creditors will usually be sympathetic if you contact them as soon as you can and explain you are having some financial difficulty. You should also make realistic repayment proposals based on your actual available budget, taking into consideration the priority you need to attach to each outstanding account. Do not be tempted to offer more than you can afford because you will only end up exasperating your creditors and adding to your woes when you find you still cannot meet payments, having proposed them yourself! Individual circumstances differ so we would recommend you discuss your situation with a professional advisor or agency such as the National Debtline or The Consumer Credit Counselling Service.

What is an IVA?

An IVA is an Individual Voluntary Arrangement. Debtors can use it as a means of reducing the amount of the debt they have to pay and of avoiding the effects of being made bankrupt, including being disqualified from holding directorships and the potential loss of a home. It is normally an option only where the debt involved exceeds £15,000. The IVA is a legally binding contract between the debtor and their creditors. It is an arrangement that can only be put in place with the agreement of those creditors who attend a formal meeting to discuss it as a proposal. The debtor must adhere to the arrangement if it is approved, for a period of 5 years. It is not a quick fix solution to debt problems and is not suitable for everyone. Failure to meet the obligations of an IVA could still result in bankruptcy proceeding being initiated against the debtor. If you have serious debt problems you should immediately seek professional advice.

Disclaimer.

The general information provided here is intended only as a guide. For detailed advice on any matter of personal finance we would recommend you consult as appropriate with your bank, a qualified professional, advice agency or reliable broker. We accept no responsibility for the outcome of any decision made by any individual that is or claims to be based in whole or in part on the contents of our help page.