Get ready to climb a mountain of debt

The number of millionaires in the UK is apparently on the rise, but the toxic mix of rising unemployment and high inflation predicted for the next few years could well mean that 1,000s of households are plunged deeper into debt.

Independent charity the Consumer Credit Counselling Service points out that, on average, the people it helped last year had just £43 a month in disposable income to repay more than £22,000 in unsecured debt ñ and that almost half of its clients cited unemployment or reduced income as the reason they couldnít repay what they owed.

If that wasnít bad enough, official figures from the Office for Budget Responsibility show that both unemployment and inflation are expected to increase from 2011. And with the jobless total currently at 2.53 million, the highest rate since 1994, and inflation running at 4.4 per cent, the picture is looking bleak for anyone whoís already worried about their molehill of borrowing becoming a mountain of debt.

But you donít have to wait until the economy poleaxes you to tackle your debts. These ten tips will get you moving in the right direction.

1. Tot up every last penny you spend, from bus tickets to big ticket holidays. Go through your bills and statements and jot everything down for a week. If youíre spending more than you earn, you need to take action.

2. If youíre already juggling credit cards to make ends meet, it is best to stop. Try to cut back on luxuries, so you can make those repayments more easily and reduce your debt gradually. You may be better off rolling what you owe up into a single loan charging less interest, but before you apply for thatÖ

3. Check your credit report. Youíll see a list of your credit accounts in one place, from loans and interest free deals to your mortgage. Your repayment record is there, too, reminding you if youíve let anything slip. Itís free to see your Experian credit report with a 30-day trial of CreditExpert.

4. Your credit report is used by lenders when they decide whether to make you an offer, so clean it up. Look any errors or inconsistencies and take them up with the relevant lender, close unused accounts that could be a target for a fraudster and shut down redundant joint accounts with former partners ñ if he or she has money problems, it could affect your credit rating.

5. Hereís an easy one: register to vote at your current address. Lenders use the electoral roll to check that you live where you say you do and being on it can add valuable points to your credit rating.

6. If you go into the red regularly, it could be worth getting an authorised overdraft. You are likely to pay less interest and could then escape penalty fees.

7. Save on essentials. Price comparison sites, such as, can help you to save on utility bills, insurance and other basics. Avoid making several applications at once because they leave a record on your credit report. If lenders find lots of these in a short period, they may think youíre desperate for money or even suspect a fraud.

8. Donít even think about borrowing more in order to meet existing repayments ñ youíll end up in worse trouble. Donít skip repayments either ñ the evidence will be on your credit report for at least three years, showing lenders youíre not reliable. Talk to them instead. They may agree a new schedule thatís more affordable or even offer you a payment holiday.

9. Donít give up. Becoming insolvent isnít an easy way out, even if your debts are written off as a result. It will be recorded on your credit report for at least six years, making it very difficult for you to borrow.

10. If youíre seriously worried, get debt advice – can help you today.

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