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5 Tips to improve your credit score

If you saw our recent post about credit score myths, you’ll know that you don’t actually have just one universal credit score. In fact, lenders will have their own different scoring criteria for each of their products.

Of course, there are things you can do to ensure that when you do apply for credit, your score will be as high as possible.

1) Find out what your score is

Firstly, it helps to know what your score actually is! Each of the Credit Reference Agencies (CRA’s) have a service which allows you to see an example score based on the information in your credit report. It’s a great idea to check these scores as well as your reports. This way, you can check the information that’s being recorded about you and make sure it’s all correct.

For further information, you can visit the websites for each of the UK’s CRA’s here:

2) Register on the Electoral Roll

Not many people know this, but the electoral roll is used to help calculate your score. If you’re not registered, it’s likely to have a negative impact and lower your score.

This might seem strange, but companies use the electoral roll to help them to verify your identity. When you don’t appear it’s harder for them to do this and so they’re more likely to decline your application.

If you’re not registered, don’t worry – it’s really simple to get yourself added. You can learn more here.

3) Close accounts you’re not using

The amount of credit that you have available to you can also impact your credit score. That means things like credit card limits or overdrafts – even if you haven’t used them!

If you have an account such as a catalogue or credit card with a limit that’s bigger than your needs or that you’re just not using at all, then it’s a good idea to contact the company to reduce your limit or close your account.

4) Make payments on time

When you think of your credit score as a reflection of how you’re managing your existing credit accounts, it’s not surprising to hear that when you make late payments, it’s likely to have a negative impact on your score.

Late payments are recorded on your credit report – and before long, too many late payments can turn into a default, a county court judgment and even bankruptcy.

Get into good habits now to maintain a healthy credit history. Where possible, set up direct debits so that payments are always made on time.

5) Don’t make too many applications for credit at once

When you apply for credit, a search is recorded on your credit report – but lenders can’t see if that search resulted in you getting credit or not. If you’ve made lots of applications over a short period of time, lenders will see this as a potential risk because you might already be over-committed. It can also be a sign that you’re struggling to live within your means.

Are you financially vulnerable right now?

Our service is there to protect and support people during times in their lives when they’re financially vulnerable. By registering, you can let companies who use the VRS know about your circumstances so that they can treat you and your information accordingly.

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5 Credit Score Myths

If you’ve ever applied for credit, whether it’s a mortgage, credit card, loan or even a store card, then there’s a very good chance that the company you were applying to, did a credit search on you. This simply means that they’re checking your credit history to see if you’re going to be a reliable customer who is likely to make repayments on time.

In this post, we’re busting a few of the myths and misinformation out there about credit scores, so you can see exactly how yours works – and how you can improve it.

Myth #1: The “blacklist”
Good news! There is no list of people who have been ‘blacklisted’ for credit.

When you apply for credit, the lender will take into account all sorts of information to help them decide whether to accept or decline your application. The ultimate decision will lie with the lender and will be based on a number of factors, such as their own lending criteria, your personal details, such as your income and your credit history. While you may be declined for one product, it doesn’t necessarily mean you’ll be declined for another.

Myth #2: You can pay to get information removed
Unfortunately, there are unscrupulous people and companies out there who will tell you that they can have information such as defaults or county court judgments removed from your credit report – for a fee of course.

Tempting as that may sound, the truth is that information can’t be removed from your credit report unless it’s found to be incorrect.

Most information will remain on your report for 6 years.

Myth #3: You have one, universal credit score
People often refer to their ‘credit score’ like it’s one score that all lenders will see when they do a credit search.

In fact, each lender has their own scoring system which is set up to score against their specific lending criteria.

It’s possible to check your score with each of the Credit Reference Agencies (CRA’s) – and they will give you an idea of what type of score you might expect when you apply for credit, but it’s important to remember that this number can and will vary from lender to lender.

Myth #4: Credit Reference Agencies decide whether you get credit
When you apply to a lender and they do a credit check – it might look like the Credit Reference Agency are the ones deciding whether it’s a ‘yes’ or ‘no’.

In fact, they’re just sharing factual information about your credit history. The lenders themselves use this information to give you a score and that score is what decides whether they accept or decline your application.

Myth #5: If you have lots of debt, you’ll have a poor credit score

The amount of debt you have can have an impact on your score. Especially, if along with all the other information you’ve provided it appears that you might already be overcommitted and so might struggle to make your repayments.

However, if you have a manageable amount of debt that you are repaying on time and in accordance with your contract, this will generally have a positive impact on your score.

Are you financially vulnerable right now?

Our service is there to protect and support people during times in their lives when they’re financially vulnerable. By registering, you can let companies who use the VRS know about your circumstances so that they can treat you and your information accordingly.

Register here

For further information, you can visit the websites for each of the UK’s CRA’s here:

Experian
Equifax
TransUnion

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Vulnerability: what is it and why should we record it?

The FCA describes a vulnerable consumer as somebody who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care. There are many reasons a person may be vulnerable. These may be related to health, capability, resilience, or the impact of a life event. The FCA expects firms to be doing the right thing for vulnerable consumers and embed this into their culture.

Service needs

Vulnerable customers are more likely to have a particular service need, for example they may require extra time to understand information helping them make decisions. The FCA is encouraging firms to consider the impact of their service on vulnerable customers.

The FCA expects customer services and systems to be in place that enable staff to respond flexibly to the needs of vulnerable customers and this can be especially challenging where processes are fully automated and communications are required to provide the necessary support.

Firm’s processes and systems should also help staff record and share information about vulnerable customers’ needs, so that customers do not have to repeat information and staff have the information to hand so they are well equipped to respond.

Firms should be aware of specialist support for vulnerable customers, either internally such as specialist teams, or externally such as charities or third-party access arrangements. They should ensure these are accessible and made known to all consumers, especially those that are identified as being vulnerable.

Interestingly, the latest FCA guidance for firms on the fair treatment of vulnerable customers introduces costs into the latest FCA guidance for the first time. The FCA estimate that implementing their guidance across financial services will cost £710m as a ‘one-off’ figure, and £450m in each following year. For the smallest firm, this could cost £3,200 and £2,400, and for the largest £3.3m and £2.4m.

This is where the Vulnerability Registration Service (VRS) can help. The VRS is a not-for-profit, low-cost service. The VRS is a register of identified vulnerable consumers.

Single reference point

The VRS provides consumers and firms that use the service with a single reference point to ensure that people who are looking to protect themselves against further debt or related financial problems do not need to have the same, often emotional, conversation with those many organisations with whom they have a touch point with.

The organisations that use our service will be alerted to someone’s situation needs, which should be considered whether they are contacting them for the first time or where they have an existing relationship with them.
The VRS has recently added a number of sub-flags, drivers of vulnerability, that help to identify a consumers vulnerability, clearly and quickly to staff, thus alerting them to a customer who may require help and ensuring the appropriate team can make the right approach.

In summary, The VRS can help your firm to identify vulnerable consumers and provide enough information, so that your staff can make the right approach. The VRS flag system will visually alert your staff members, informing them that a customer has a vulnerability. The VRS sub flags will provide enough information for the customer to be placed with the right team.

The VRS would be delighted to discuss any opportunities to provide its’ service to your organisation, so please do get in touch.

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How to support someone who can no longer manage their own finances

There are a number of reasons why someone may find themselves unable to manage their own money. They may have a condition such as autism or downs syndrome which makes it very difficult or they may have an illness like dementia or Alzheimer’s. In these situations, it’s important that people have someone they trust who can take care of their financial affairs for them. If you have found yourself in the position where you need to support someone who can no longer manage their own finances, then here are some simple steps you can take.

Establish the level of support that is needed

A good place to start is to get clear on what support – and how much of it, the person needs from you. It could be that they just need some help setting up payments for their bills or creating a budget for their household expenses. Or they may need more formal and comprehensive support in handling all of their financial affairs.

Informal support

There are lots of different ways you can help someone who is struggling to manage their money. Here are a few for you to consider and discuss with the person you’re looking to support:

  • Setting up standing orders and direct debits for bill payments to make sure these are paid on time
  • Creating an income and expenditure with them to help them to keep to a budget
  • Support them with any big financial decisions such as any large purchases or investments
  • Help with paperwork
  • Attend meetings with them – for example with financial advisers, benefits advisers or bank officials. These can be stressful at the best of times so some moral support can make all the difference

Formal Support

More formal support such as getting a Power of Attorney will be appropriate either where you and the other person have both agreed this is for the best or where the other person has been deemed not to have the mental capacity to manage their own affairs (for example, where they have dementia).

What is Power of Attorney?

This is a legal document which lets someone choose one or more people to make decisions on their behalf. Where the situation is temporary, they can apply for Ordinary Power of Attorney and where it’s permanent, they would apply for Lasting Power of Attorney. There are two types:

Health and welfare
Property and financial affairs.

It’s possible to apply for just one or both.

To apply for power of attorney, the ‘donor’ (the person requiring support) must be over 18 and have mental capacity – which means they must still be able to make their own decisions at the time they apply.

For more information on applying for a Power of Attorney, visit gov.uk.

Registering with the VRS

Anyone who is struggling to manage their own finances would be considered financially vulnerable and so it’s a good idea to let companies know their situation. If you’re offering informal support, then have a chat about the benefits of registering.

Alternatively, if you’re managing someone’s finances on a more formal basis and have an appropriate signed authority or legal Power of Attorney, then you can register on their behalf.

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6 Things to do if you lose your job

Losing your job can be an extremely stressful time, especially if it happens unexpectedly. It can often leave individuals and families with a significant drop in income and a sudden inability to pay their bills. The good news is, there are steps that you can take to help you to get back on track again as quickly as possible, so if you or your partner have recently become unemployed, take a look at the tips below.

1) Check what support you can get

The sooner you can find a way to supplement your lost income while you search for new employment, the better! The government have provided this handy tool to help you identify what support or benefits you may qualify for. Then make sure you make a claim for anything that’s relevant. It can feel difficult or awkward – but remember that these systems are in place to support people just like you who have found themselves in a vulnerable situation, often through no fault of their own.

2) Speak to your landlord or mortgage provider

When you have a sudden and significant change to your financial situation, it’s a good idea to protect your home. Get in contact with your landlord or mortgage lender as soon as you can to let them know what’s going on. They may be able to offer you some support, such as payment breaks or reduced payments for a period of time until you’re back on your feet again.

3) Review your budget

While it may feel tempting to bury your head in the sand, it’s important to review your new financial situation immediately so you know exactly what your income and expenses are. This will also give you an opportunity to cut any unnecessary or forgotten payments that you’re making such as un-used gym memberships or subscriptions.

Further reading: How to budget on a small income

4) Don’t ignore your debts

If you can, continue to make any monthly payments to your debts such as loans or credit cards. Failure to do this could result in additional charges or even defaults or county court judgments which would have a detrimental impact on your credit history.
If you’re struggling to maintain payments, then get some support and speak to a debt advisor. They’ll be able to advise on your best course of action and may also speak to lenders on your behalf to arrange reduced monthly payments.

5) Use the time to improve your job opportunities

When you lose your job, it can feel strange to suddenly find yourself with a lot more free time than normal. It’s easy to let yourself become depressed and inactive, but instead – use this time to improve your job opportunities by updating your CV, speaking to a career advisor or even learning a new skill.

6) Register with the VRS

Our service is there to protect and support people during times in their lives when they’re financially vulnerable. By registering, you can let companies who use the VRS know about the change in your circumstances so that they can treat you and your information accordingly.

Register here

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Who should register for the VRS?

The Vulnerability Registration Service (VRS) provides vulnerable consumers with a way of sharing information on their circumstances with companies they have dealings with.

People can choose to be pre-declined for credit applications – or, if they prefer, they can simply make companies aware of their circumstances, so that these can be taken into consideration during any dealings with them. This may include applications or in the case of existing accounts, managing arrears or debt collections.

So, what is vulnerability – and how do you know if you should register? In this post, we want to share some of the main causes of vulnerability to help you decide if registering with the VRS is right for you.

Illness
Any serious health issue such as cancer or a heart attack can have a huge impact on your life – and your ability to work and maintain a stable financial situation. Many people find themselves financially vulnerable in these circumstances and by registering with the VRS, they can let companies know what’s going on.

Physical Disability
People with physical disabilities can find their earning potential is limited. On top of this, there are often higher costs to consider such as specialised equipment and care.
The VRS can be a good option for anyone with a physical disability.

Mental Health
There are numerous links between mental health issues and debt. Mental health conditions such as bi-polar can often lead to irrational behaviour and over-spending. If you’re worried that your mental health could cause you to get into un-manageable debt (or if it already has), then the VRS can help you to protect yourself from this.

Cognitive Disorder
Conditions such as dementia, autism or down syndrome make it incredibly difficult (or in some cases, impossible) for sufferers to manage their finances without support. In these instances, the individual (or someone who has legal responsibility for them) can register with the VRS to ensure that companies are aware of their circumstances and treat them accordingly.

Life Event
Vulnerability can often be caused by our life circumstances at a given time. Life events such as the death of a loved one, divorce or addiction can suddenly throw our finances into turmoil. Rather than struggling through, registering with the VRS can give you some peace of mind and let companies know what’s going on until you’re in a better place.

Financial Circumstances
An individual’s financial circumstances are a very common cause of vulnerability. If you are living on a very low income, you’re relying on benefits and/or you have high levels of debt, then that puts you in a vulnerable situation and by registering with the VRS, you can help to protect yourself from further debt and let companies know that you’re struggling right now.

Financial Capability

Lastly, financial management can be extremely difficult for some people, for example the very young, the elderly, someone who has poor literacy and numeracy and people for whom English isn’t their first language. In these examples, the VRS can provide some protection against unmanageable debt and offer a way for you to let companies know your situation.

If you think the VRS could be a good option for you, then registering costs nothing and couldn’t be simpler. You can watch this quick tutorial to see exactly what to do. Or check out our FAQ’s if you want to learn more.

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5 Ideas to help you to save money faster

Most of us have something we’re saving for, whether it be our first (or next) home, a dream holiday or just that jacket we saw the other day. The problem is, saving money is difficult and often takes a lot longer than we’d like it to (or than it needs to) – so what can we do to help speed things up a bit? In this post, we’re sharing 5 simple ways to save money faster…

1) Set savings goals

Often our enthusiasm for saving gradually reduces as time goes on and so in turn, does the amount we put away. When we first see the jacket in the window, our desire is strong and so is our motivation to save the money to buy it. We prioritise our savings in order to achieve our goal.

By setting a specific savings goal (and attaching a clear vision of what we’ll do with the money when we achieve that goal) you’ll give yourself much more motivation to keep going – and to get there faster.

2) Prioritise your debts

The interest that you pay on your debts is much greater than the interest you’ll earn in a savings account, so it makes sense to use your money to clear your debts first and then to start saving it.

Work out what you can afford to put away each month and then use this to clear your debts as fast as you can. Once you’ve done this, you’ll find yourself with more available money to save each month.

3) Cut the bad habits

Are you needlessly spending money on something that isn’t serving you? Perhaps it’s cigarettes, alcohol, drugs or gambling…

Review your current spending habits and look at the areas where you’re spending money that you could be saving in order to achieve that new home, dream holiday or perfect jacket faster…

If you’ve been overspending and using credit to fund your bad habits, then now’s the time to stop. To help, you can register with the VRS and select the option for lenders to automatically decline any applications from you. By doing this, you can rest assured that even during moments when you’re feeling weak, your finances are safe – and so are your savings.

4) Put the money out of reach

Another common frustration for savers is that as fast as you save, you manage to find new reasons to spend and so the pot never seems to grow.

A simple way to prevent this is to choose a savings account which doesn’t allow you to easily access your savings. This way your money is protected until you really want to use it.

5) Use tools to help

Did you know that there are tons of tools out there which are designed to help you to save faster? You can use apps such as Money Dashboard to help you to budget. Apps such as Oval, let you set savings rules based on your habits. For example, you might create a rule which means you pay £1 into your savings whenever you go for a run – or even post on Facebook! Lastly, there are apps like Chip, which can be set up to automatically transfer your ‘change’ to your savings account whenever you pay for something online.

If you’re trying to save for something, then why not try a few of these tips to help you to get there faster?

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New partnership between the VRS and Cifas

We’re both proud and excited to share the news that we are collaborating with Cifas to host vulnerable consumers currently included in the Cifas Protecting the Vulnerable scheme on the VRS register.

Cifas COO, Richard Freedman has said ‘The Vulnerability Registration Service is singularly focussed on supporting the vulnerability agenda in the UK. We are delighted to be working with them, and believe that this agreement will help to strengthen and enhance the protection offered to some of the most vulnerable consumers.’

VRS director, Helen Lord echoed his enthusiasm, saying ‘We are very pleased to have been selected to take over the Cifas Protecting the Vulnerable scheme to ensure the ongoing protection of vulnerable consumers. The VRS will be able to work with Cifas to offer a wider range of protection services going forwards.’

You can read the full press release here

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5 Strategies to stop emotional spending

People are experiencing and dealing with the current coronavirus crisis in different ways. For many, it has resulted in financial strain and for a lot of people, there has also been an emotional and mental toll. For anyone who has a tendency towards emotional spending, this is a dangerous time as our emotions are all over the place and so are our finances.

In this post, we’re sharing 5 helpful strategies to stop emotional spending as a way of coping.

1) Recognise your emotional triggers

If your spending is triggered by emotions, then it’s helpful to identify which emotions are particularly dangerous for you. It could be relationship stress, self-esteem issues, boredom or even, ironically, money worries which cause you to get out the credit card.

Once you recognise what your triggers are, you’ll be better equipped to overcome them. Next time you find yourself hovering over the ‘Buy’ button, try jotting down a few notes on how you’re feeling.

2) Avoid temptation

If you know that you have a problem with emotional spending, then do what you can to reduce your temptation. Avoid advertising, by using software to block ads from your computer. Unsubscribe from any marketing emails that you know will tempt you.

You can also use services like the Vulnerability Registration Service to self-exclude from credit so that you know you won’t be able to emotionally spend beyond your means. When you sign up you’ll be given the option to request that any lenders signed up to the service will decline any credit applications in your name for as long as you’re registered.

3) Wait 30 minutes

When you do find yourself about to purchase something, try waiting for 30 minutes. Often this gives that emotional trigger time to die down and you, time to consider your decision reasonably. Try asking yourself the following questions:

• How am I feeling right now?
• Do I need this?
• What if I don’t buy it now?
• Where will I put it?
• How will I pay for it?

4) Review your finances regularly

If you’re prone to emotional spending, taking a good look at your finances can be like a bucket of cold water on your emotional trigger. When we bury our heads in the sand, it’s easier to justify our spending – but when we can see the actual numbers in front of us, it’s harder to go with the instinct to spend more.

5) Don’t save your payment details online

When we don’t really need something that we want to purchase, we can often be put off by something as simple as the inconvenience of having to go find our payment card and enter the details. Having to do this, also gives us more time to consider our purchase and let our logical mind take over from our emotional urge.

Lastly, if you find that your emotional spending is getting out of control, then consider getting some support whether that be talking to a friend or seeking some financial counselling.

If you’d like to know more about how The Vulnerability Registration Service can help, then take a look at our ‘Guide for Consumers’.

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How to cope with money worries

Many people experience money worries at some point in their lives – and thanks to the widespread impact of the Coronavirus, this is true now more than ever. The problem is that worrying about our financial situation alone, doesn’t improve it. In fact, often it’s those anxieties which drive us to bury our head in the sand or even to spend more – which of course, only makes things worse!

In this post, we’re offering some simple tips on how to cope when money worries are overwhelming you so that you can start to take back control of your finances and get the support you need to stay on top of your mental health.

Recognise your money worry triggers

Next time you find yourself worrying about money, take a moment to reflect on what triggered those thoughts and emotions. More often than not, there are specific triggers which set off your anxiety. It might be a bill arriving in the mail, or a bank notification on your phone. It might just be an advert for something you want to buy but can’t (or shouldn’t) right now.

Once you know what is triggering you, you’ll be better able to control your thoughts – and prevent the risk of overspending as a way to overcome your negative emotions.

Talk to a friend or family member who you trust

Having someone to talk to can make a huge difference to your mental wellbeing. Although it might feel scary at first, if you can share your worries with a person you trust, you’ll not only feel better, but they may be able to help you to find solutions for your financial difficulties.

Keep busy

If your money worries have been caused due to a loss of employment or business, then this can have a negative impact on your motivation and energy. Try to stay busy – whether that’s by looking for alternative work or just focusing on a new hobby or goal until you’re able to work again or replace your income in some other way.

Don’t be afraid to get professional support

If you feel like your anxiety – or your money problems are becoming unmanageable, then always get support. It’s common to feel embarrassed about asking for help, but in fact, the opposite is true. Asking for help takes courage and is the best way to overcome both your mental health and money worries.

The charity, Mind can offer money and mental health support.

Register with the VRS

We all experience times in our life when we’re vulnerable for whatever reason. It could be illness, bereavement, job loss or marriage breakup. During these times, it can be a great comfort to know that the companies you have dealings with know your situation and will treat you accordingly.

If your situation is causing you to overspend, then you have the option to ask all companies to automatically decline you credit for as long as you’re registered. Alternatively, you can choose to ask them to thoroughly review your application and to speak to you about your vulnerability.

For more information on how to register, take a look at this brief video.

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