YourMoney.com, 16th January 2015, Blog: Three tips for 2015 financial success

The New Year brings new opportunities, a fresh start and even the (distant) prospect of improving weather, but it also comes with the strong possibility of an interest rate rise from the Bank of England, and for some, the lingering financial shadow of the added pressures of the festive period.
For those with mortgages, an interest rate rise will further squeeze household budgets by pushing up the monthly payments, whilst for others who have savings put aside, it will be good news resulting in a small boost to incomes. Whatever the situation, the quiet period following the Christmas break will provide a good opportunity to look at spending and polish credit scores in preparation for the year ahead.

1) Make your credit score work for you. By knowing all the pitfalls – and equally, what can be done to push up your score – you can actually take matters into your own hands and maximise your credit score. For example, sharing a bank account with a live-in partner is often a decision guided by relationship factors, rather than financial planning. Being aware of the knock-on effects – either positive or negative – of these seemingly trivial decisions and taking some simple steps can make all the difference and may increase your chances of getting a better deal on a loan. Other factors like taking out a mobile contract rather than pay-as-you-go and registering to vote can all make a big difference.

2) Research your credit options carefully. January is one of the most financially stressful times of the year, not just because it follows Christmas, but because it brings with it the height of the British winter. It’s the time of the year when boilers break, roofs leak and the extra long wait following December’s early pay day feels like an eternity. It’s also a time when people look ahead to their projects and costs for the coming year; home improvements, new cars, holidays or public transport season tickets for example. For these reasons, credit is commonly required, but often borrowers with less than ‘perfect’ credit ratings find themselves devoid of options, caught between the banks that might not accept them and the short term lenders that will charge high interest rates.

When considering credit options, it’s important to properly explore the market and pick out the great deals that are still available to average borrowers. Furthermore, make sure you use comparison sites that accurately search the market for the most suitable products to fit your individual circumstances. It’s important to find the best possible rate for your personal situation as applying for credit beyond your means can actually have a detrimental effect on your credit score in the long term.

3)Take bold steps to manage the household budget. When finances are tight, it’s often surprising what measures borrowers don’t consider in order to manage the household budget. Credit is a useful way to supplement income, but it must always be sustainable and affordable. Often, bold decisions are required such as cutting that gym membership to run on the roads or switching from satellite TV to Freeview.

January is a testing time of year for household budgets, but with the right attitude to credit and enough discipline, it can instead become the springboard for a financially healthy 2015.