PayPlan and Experian discuss debt and credit score

Written by Tom James on 10 August 2020

Ryan Horton from PayPlan and John Webb from Experian answered the big questions concerning your credit score and debt in a Facebook Live event earlier this month.

We’ve collated the questions covered, along with a few highlights from their answers…

My income has been impacted by Coronavirus. What options do I have?

If your income has been affected by the Coronavirus pandemic, you may be struggling to meet your monthly repayments. Lenders are offering support in the form of payment holidays, extending credit limits or lowering interest rates.

If you are struggling financially due to COVID-19, you should:

  • Use PayPlan’s benefits calculator to check you are getting all the benefits you are eligible for
  • Speak to your creditor and try to arrange a repayment plan that will help you cope better
  • If you find that your lender is unable to help, you should immediately seek debt advice

It’s normal to feel overwhelmed by debt but there are organisations out there – like PayPlan – who have experience in offering free help and advice.

I’m self-employed and my circumstances are very unstable. Should I wait to get debt advice?

If you cannot maintain repayments or feel you may not be able to soon, seek help straight away. Delaying the problem causes worry and stress, so seeking help sooner can offer a huge sense of relief.

PayPlan has a specialist self-employed team who can help to deal with business debts and work out a plan to get you looking forward to the future. If you feel you may be impacted soon, now is the time to start preparing. If you can, put some money aside to prepare for any future income shocks.

Just one missed payment could affect your credit score (capped at 999 points) by 130 credit score points, so it’s important to be prepared for the benefit of your finances and your credit file.

I’m finding it difficult to make ends meet. Should I borrow money to get me through this difficult time?

If you’re finding it difficult to pay back debts, the advice is to not borrow more. As previously mentioned, you should claim everything you can and speak to your lenders for support. If you are still struggling, seek free debt advice.

Lenders should be offering support – like payment breaks – but these only delay the inevitability of paying back your debts, so trying to pay them back sooner is advisable.

Will claiming Universal Credit affect my credit score?

Income doesn’t show up on your credit report, so claiming Universal Credit will not affect your credit score. If you are claiming Universal Credit due to a loss of income, your credit score will be affected if you are no longer repaying your debts and missing agreed payment deadlines.

If you feel you will struggle with repayments after an income shock, then seek debt help straight away.

What are the easy things I can do to build up my credit score?

It takes time to build up your credit score but there are steps you can take to get it to a healthy level.

First, make sure you are registered on the electoral roll. This will confirm and protect your identity, so creditors can be reassured of who you are and where you live. If you feel at risk of being listed on the electoral register, you can register anonymously.

You may also want to consider getting a credit card and using it for small weekly purchases. This will help build up your credit score as lenders can see you are a trusted borrower. You should be careful to pay back your debts on time and in full, so you don’t damage your score. You may see the benefits of an improved credit score after 6-12 months.

If you know you are going to miss a payment on something like a mortgage, utility or phone bill, it’s important to try and arrange a payment plan with your lender before this happens. This will help to protect your score in the short-term.

How do I qualify for free debt advice?

There are no criteria for being eligible for debt advice. Everyone is different and you will be presented with solutions that suit your own circumstances.

Many people wait to seek advice as they’re either fearful or unsure if they can get it. PayPlan’s advice is to seek help as soon as possible if you are struggling now or believe you will soon.

Getting debt advice – like checking your report – doesn’t affect your score and you should feel confident that speaking to a professional will put you in the best position possible to move on.

Are there any top tips for getting out of debt?

You may ask yourself this question if you’re currently concerned about debt. Use a credit reference agency like Experian to see what exactly you owe and who you owe it to.

You should also check your outgoings and income to work out a budget – you may be paying more for some bills than you expected. Think about the size of each debt, how long you have to pay it back and the rate of interest. Pay your priority bills first (mortgage, council tax and utility bills) then try to tackle the larger, non-priority, debts so these don’t grow larger.

If you cannot cope financially, speak to a free debt advice company and see if a debt plan can help you get on top of your debts.

Will getting a payment holiday affect my credit score?

A payment holiday that was agreed outside of the Coronavirus pandemic is likely to affect your credit score as you aren’t paying back your debts in full and on time.

If you – like many – were granted a Coronavirus payment freeze, your credit score should not be affected. Credit reference agencies and lenders agreed to not penalise borrowers in such exceptional circumstances.

You shouldn’t be afraid to tackle your finances with the help of a professional. Free help is available to put you in a better financial position for the future.

Watch the Facebook Q&A

You can watch the full webinar and hear what Ryan and John had to say in more detail.


Filed under Industry News

This article was checked and deemed to be correct as at the above publication date, but please be aware that some things may have changed between then and now. So please don't rely on any of this information as a statement of fact, especially if the article was published some time ago.

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