Mixed messages on personal debt

Posted in 'Dealing with Debt' by Richard Catlin

14 September 2009

At the same time as celebrating its 70th birthday, the Citizens Advice Bureau has revealed that it is currently receiving over 9000 requests for help with debts each day.

Despite recent indicators that the UK may be gently recovering from recession, the charity said that the number of debt-related enquiries it is receiving was up 27% in the three months to June, with mortgage related requests especially prominent.

At the same time, figures released by the Bank of England show that levels of personal debt in the UK fell for the first time since records began. July saw borrowing drop by £600 million - leaving the total owed by consumers at £1.457 trillion. Despite the overall drop, borrowing on credit cards actually increased by £92 million.

The majority of the fall was attributable to net mortgage borrowing, which fell £400 million, with a further £200 million being paid off of personal loans. This is despite the number of mortgage approvals increasing for the 6th consecutive month.

The increase in credit card borrowing is likely to be down to more consumers using existing credit facilities to help with day-to-day living expenses, rather than a lift in the number of new cards being issued.

Lending criteria remain strict, which reinforces the importance of not only making sure that your credit rating is as strong as possible, but also that any application you do make is to a lender who fits your credit profile.

You can view your credit file online with checkmyfile, based on data from any one, or all three UK credit reference agencies. Once you've got your report, you'll be able to speak to a qualified credit analyst who will be able to give you free advice on how to improve your rating, and you'll also see online which credit card providers are most likely to say "yes", based on your credit score.

View your full credit file online here, or to see which lenders are matched to your free credit score and rating, click here.