Debt can be a dangerous thing, and with more and more young people taking credit than ever before, and even a current account yielding features such as an overdraft, it is more important than ever before to ensure that the debt culture does not continue.
One important thing to remember is that it is preferable not to live on credit to manage your outgoings, as this will tend to build up more and more debt. If you are working, see if there is any overtime to manage your outgoings, likewise, if you are not working, speak to local companies about working for them, and also check online for any unemployment benefits and tax credits you could receive. This could improve what you have to spend, as well as stop a circle of credit.
Credit cards are important to build a credit history, especially if you’re thinking of buying a house in the future; however, remember that you cannot have a loan or credit card until you are 18, even though many companies will be willing to run through an application with you. It’s also important to remember that a perfect credit score will not automatically entitle you to credit, as it fails to register basic questions such as ‘do you have a job?’ and ‘what is your income?’ This is one that many young people fail to remember, and can get annoyed when not accepted for cards, whilst severely damaging credit credibility in later life. Start with a basic credit card, which may come with a high interest rate, and ensure that you always repay in full and on time, as this is not only the fastest way to build your credit rating, but it will mean that you are gaining credibility for free. If you are having problems with what is known in the UK as the ‘Vanquis Trap’, then seek immediate debt advice to solve the problem, rather than letting it get worse.
There are also talks of Money Saving lessons being delivered to UK classrooms, to help young people avoid the debt traps. One of the main people in this is Martin Lewis, of moneysavingexpert.com, as he has helped millions of people out of debt, even bringing his self-funded venture with a higher presence than iTunes. His influence, especially in parliament could see the lessons rocket in the eyes of children. It’s always easiest to deal with debt at an early age, rather than letting the problem build up over time, effectively getting worse as it does.