11. Frequently Asked Questions:

Find out more about the common questions surrounding:

Credit Score

What counts towards a credit score?

A credit score is made up of a number of different forms of borrowing, which may include:

• Utility bills (water, gas and electric)
• Mortgages
• Personal loans
• Credit cards
• Car finance
• Mobile phone contracts
• Buy now pay later agreements

Your credit score is visible to borrowers and it is essential to keep up with the above repayments if you have them, so you will be able to take out credit at an affordable rate of interest in the future.

How will my credit score be affected?

Every time you interact with credit, you leave a footprint on your credit score. You will need to be careful not to overdo it when it comes to applying for or taking out credit, as lenders will be able to see your history and base their decision to lend to you on this.

Your credit score will be affected every time you:

• Apply for credit
• Take out credit
• Pay credit back
• Fail to pay credit back

It’s important to apply for credit sparingly, only apply for what you can afford to pay back and pay it back in full and on time. If you can stick to these principles, your credit score should improve over time.

How can I improve my credit score?

To get your credit score to a healthy level, there are a few things you can do. The most basic things to do immediately are pay your debts back on time and not borrow what you are unlikely to afford. You should be careful not to over-apply for credit, as this can lead creditors to thinking you are desperate for funds and a potential risk.

Creditors will look to the electoral role to double check who they are lending to, so registering to vote will help your credit score. This will allow lenders to easily verify your name and address and give them the confidence as to whom they are lending.

You should cut any ties with anybody who may damage your credit score – like an ex-partner. If you can prove you are no longer financially connected, ask the credit reference agency to remove this link on your file.

How long will it take for my credit score to improve?

There is no exact length of time it will take for your credit score to improve, so you will have to be sensible and patient. It can sometimes take months to see an improvement, but it could also take years. The sooner you can clear your debts and begin repaying new or existing bills on time, you should see an improvement in your score which will help your ability to borrow in the future.

If I cannot pay my bills, will my score be blacklisted?

This is a myth – there is no such thing as a ‘blacklist’. You will find your credit score and ability to borrow at an affordable rate is affected, but you will be given the chance to rectify this and get back on your feet.

Benefits

What benefits am I entitled to?

The benefits you are entitled to depend on your personal circumstances. You could make a claim if you are out of work, on a low income, living with a disability/illness or are caring for someone. This is not an exhaustive list and you should make sure you use a benefits calculator to ensure you are claiming everything you can.

Where can I get welfare benefits support?

There are various websites which you can use to help identify eligibility for welfare benefits:

• www.turn2us.org.uk
• www.entitledto.co.uk
• www.gov.uk
• www.sense.org.uk
• www.citizensadvice.org.uk/benefits

You can also make an appointment with the Welfare Benefits advisor at your local Citizen’s Advice. The Advisor will be able to help with any benefits application ensuring that forms are completed accurately for you. You can also find help from your local DWP office and most local authorities have a benefits team who may be able to provide advice and support.

Bailiffs or Legal Action

What’s the difference between a Doorstep Collector and a “Bailiff”?

A doorstep collector is a representative sent by your creditor to try and help work out an affordable payment for you to repay. They have no special legal powers that give them any rights to force entry or repossess any goods.

A bailiff has the same target as a doorstep collector, but they have extra legal powers that allow them entry into a property in order to assess and claim good for raising money to pay off debt.

All bailiffs should comply with their regulators and should you feel that they are not following this, you can report this to the bailiff company, the creditor and ultimately to the court that the bailiff is licensed by and registered at. You can find out which Court.

When and how can bailiffs forcibly enter my home?

You do not have to let a bailiff into your home or business premises between their legal visiting hours of 6am-9pm, but they can use reasonable force to gain entry. They are allowed to peacefully enter via a:

• Door
• Gate
• Attached garage
• Loading bay

However, bailiffs are not allowed to enter your home via:

• A window
• Climbing over a wall/fence
• Climbing a locked gate
• Taking up floorboards

If a bailiff visits you between 9pm and 6am or tries to enter your property in an illegal fashion, you will be able to complain as they would have committed a criminal offence. To make a complaint, email a detailed account of events to the High Court Enforcement Officers’ Association at complaints@hceoa.org.uk or call them on 0844 824 4575.

Can I go to prison for non-payment of my debts?

Sending you to prison would be a last resort for a creditor if the debt you owe is one that can result in a prison term. There is no longer such a thing as a debtor’s prison. A creditor would have to prove “willful non-payment” for prison to be a consideration and this is rare.

Debts fall into two categories – priority and non-priority. If you were to willfully refuse to pay the following debts, you could be summonsed to a committal to prison hearing:

• Council tax (England and Scotland only)
• CSA arrears
• Criminal fines
• Business rates

You cannot be sent to prison for most consumer credit debts. Examples of non-priority consumer debts are:

• Overdrafts
• Credit cards
• Catalogues
• Loans
• Rent or mortgage arrears
• Payday loans
• Utility arrears
• HP/PCP debts

Budgeting Queries

What’s included in a reasonable household budget?

A reasonable household budget would be considered as what is necessary to maintain an acceptable standard of living given your financial means. There are guidelines which creditors use to establish what is reasonable for the number of people within the household for things like food shopping, phone, internet and hairdressing.

How can I quickly set up a budget?

To set up a budget, you will need to complete and income and expenditure (I&E) form and work out how much you can afford at the end of each month. By working out your income minus your outgoings, you will be able to see how much you can afford to pay towards any debts and whether there are any outgoings you can save money on.

Do creditors need to see my budget?

If you wish to set up a debt solution with a creditor and negotiate lower monthly repayments on your debts, you will need to complete and income and expenditure form and show this to your creditors. This will allow them to understand your circumstances better and strengthen your negotiating position if you are in need of financial support.

Am I allowed to edit my budget after completing it?

Circumstances change and creditors should allow reasonable adjustments to a budget if you can provide evidence of this. You may be able to reduce payments for a period of time until you are able to afford them again, but you will need to be aware of interest and charges that could mean you pay more back overall.

If you find you are earning more money, you can put this towards your debts and pay off what you owe – your creditors will expect you to do this if you are being offered a payment break or are in a formal plan.

Creditor Letters

How do I stop creditors sending me letters?

The easiest way to stop creditor letters arriving at your door is to pay back your debts. You can try to set up a repayment arrangement with your creditors to pay back your debts over a longer period of time – interest and charges may still apply – but failing to repay anything will mean you still receive letters chasing money or threatening court action.

What happens if I ignore creditor letters?

If you ignore requests for payment, then creditors are within their rights to take legal action and send bailiffs round to your property. The letters will keep coming and the easiest way to prevent this happening is to carefully read (and keep) all the letters and act on what is being asked of you.

How long can creditors chase me for payments?

Creditors can chase you for as long as there is a debt to paid. However, if they fail to contact you within a six-year period and have not obtained a judgement to collect the debt within this time, the debt will become ‘statute barred’. This means you do not have to pay back the debt as this will fall outside the period stated in the Limitations Act of 1980.

How do I pay a revised payment to an unsecured creditor?

If you have made a repayment arrangement with a creditor, you should make payments via a standing order from a neutral bank account. This will ensure you are making payments and any funds you have are protected from the right to offset.

You can set up a standing order easily through your online banking platform (if applicable) or by going into your bank and setting up a standing order mandate. In both cases you will need the account number and sort code of the account/creditor you wish to pay and the date on which you want payments to be made. This way you can be sure that payments are made regularly each month and you will have evidence of payments being made on your bank statement. Standing Order allows you to control when and how much a creditor gets paid.

You can pay either weekly, fortnightly, monthly or every 4 weeks. You may want to vary how you pay back your debts so all payments go out together, or so you can stagger them to suit your budget.