In late 2006, MoneyWeek reported that the bad debt boom in the UK was just beginning. Six years later, we know that this was correct. Millions of UK residents are still grappling with all types of debts. According to the PriceWaterhouseCoopers reported entitled “Precious Plastic 2011,” total UK household debt was 110 percent of GDP in 2011, making UK consumers some of the most leveraged on the planet.
From 2009 to 2011, record bad debt and credit card levels peaked, according to the report. At the end of 2009, charge-offs represented 7.6 percent of outstanding balances. The firm believes bad debt levels will begin to subside but increasing funding costs during the next few years will lead to dramatic changes within the credit industry. This trend may be reassuring overall but does nothing for the thousands with personal insolvencies like Debt Relief Orders, Individual Voluntary Arrangements, and bankruptcy orders.
Every UK consumer should be aware of his or her personal financial status. Ultimately, the only party responsible for managing debt is the person facing it. The report noted that a probable increase in interest rates and continued uncertainty regarding housing prices could signal trouble. This is troubling, considering how bad things have already gotten.
To determine whether any debts have been written off as bad debt, request a credit reference file from each of the three credit reference agencies in the UK: Callcredit, Experian, and Equifax. Cost is £2 each and the file can be requested by writing directly to each credit reference agency. Include your full name, any other names used during the past six years, full address and any other addresses during the past six years, birth date, and payment.
After receiving the three credit reference files, review them to determine whether any debts are late, credit limits have been exceeded, or items previously in arrears have been written off as bad debt. If a tax lien, judgment, or bankruptcy proceeding is in process, this will be noted on the file because it is a part of public records. Details listed will include when and how the record was filed and how much money is involved.
Note that a credit score is not included in a credit reference file. Credit reference agencies may charge an extra fee to obtain this score or the score may be included in a free trial or special deal. Finance companies do not publicize details regarding their scoring systems or the ranges they use. However, the scores provided by credit reference agencies provide consumers with a good estimate of where their credit stands.
If your score is very low, review your credit reference files to identify what might be causing the situation. All bad debt should be dealt with quickly to prevent the situation from worsening. A consultation with a debt management professional will reveal various ways of handling debts including debt consolidation loans and renegotiating repayment arrangements directly with creditors. Dealing with past due balances as soon as they arise prevents them from eventually being classified as bad debt.
