Have you ever looked at your Equifax credit report and wondered how it got into such a bad state? Sometimes, we can accrue debts without even realising it. These could be from a long time ago, or they could be things that you simply forgot to pay for.
We can accrue debts without even realising it.
For example, you might have moved house or changed email address and not updated your details with your gas provider. If you aren't aware of this, because you weren't informed about it, statements or letters may be being sent to an old address, or notifications sent to an email address you haven't used for a while. That doesn't excuse the debt, however.
How can you avoid falling into this trap?
To keep your credit report clear, and to avoid having to pay off old debts because you didn't know about the money you owed, you need to keep track of all of your expenses to keep on top of bills and repayments and make sure you keep your details with your credit providers up to date. If you open a new credit account and don't read the fine print, how are you going to know what your responsibilities are? What happens if you reach your limit and can't make the minimum monthly repayments?
Another way of keeping a clean bill of financial health is by ensuring you have an accountant regularly checking your money matters1. An accountant can help you to understand financial statements, tax laws and levy payments (if you need to make them) as well as inform you about staying out of debt, and creating wealth1.
What should you do about old debt?
Any old debts that you come across need to be dealt with as quickly as possible. Leaving them for longer could result in more interest accruing, making it harder for you to pay off. The longer your credit report is in a state of disrepair, the harder it may be for you to take out a loan or new line of credit.
Make sure you keep track of all purchases made on credit, and retain receipts as well as account statements.
List all of your old debts in order of date and value, and start paying them off2. If you can pay off multiple debts at once, do! Making the minimum monthly repayments is the first step. If you can afford more, make an effort to pay everything off as quickly as possible.
Ensure you get a copy of your Equifax credit report today.
Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.
1QuickBooks, 9 signs you need an accountant. Accessed March 2017.
2The Balance, How to pay off old debt. Accessed March 2017.