March 23rd, 2016 | Andrew Hagger | News

New research reveals that 9 out of 10 people don’t know their own credit score and of those that do, the average score is “poor” sitting at 567.

The study by Amigo loans, which surveyed 2,000 UK adults, paints a gloomy picture of the UK’s credit landscape and shows those aged under 24 are the worst affected with an average score of just 300, classed as ‘very poor’. This means that they are likely to struggle to secure the best deals on mortgages, credit cards or a mobile phone contract.

45-54 years olds, who have had the time to build a good history of borrowing and paying off debt, come out on top with an average of 659. However, this is still classed as a “poor” credit score under UK guidelines.

Industry research claims half of UK adults are likely to be refused credit. From accessing a mortgage to getting the best tariff from energy providers, consumers often need to pass a credit check. Poor credit ratings are not only confined to those with a poor financial past – even missing one payment or dipping into an unauthorised overdraft can have a huge impact.

With such a significant proportion of the UK population not even knowing their credit score, it highlights that credit scores are inherently misunderstood or ignored by general consumers.

Glen Crawford, CEO at Amigo Loans, which commissioned the study said:

“There is a huge lack of understanding about credit scores; it’s a complete myth that we have one universal ‘score’. It’s crucial that people, who believe they do have a chequered financial history, take positive actions to improve their credit file, so they will be more likely to be accepted for mainstream financial products in the future, such as a mortgage. Borrowing with Amigo is one way of doing this.”

 Amigo loans has collated top tips for improving your credit score:

• Make sure you are on the electoral register. Lenders use the electoral register to help fight identity fraud and confirm a person is who they say they are and that they reside at that address.
• Pay bills on time or ahead of schedule, a good credit score needs to be built up over time – lenders will look favourably on this.
• If you notice anything on your credit report that could be incorrect or you think you might be the victim of identity fraud, i.e. you think someone has applied for credit in your name, contact the credit reference agency who will work with the lender to try and resolve the issue.
• Avoid keeping a high balance on your credit card. Lenders may view it as excessive debt and be concerned about your ability to repay.
• Only apply for products when you really need them – applying for more than four forms of credit in a year can lower your credit score.
• Do not make multiple applications for credit as this can have a negative impact on a credit record.
• Close down out of date credit cards and make sure you cancel old agreements, such as store cards you never use, as these will still appear on your file. Lenders may be wary about the potential size of your debt.
• Sever old financial relationships if you are divorced or separated, making sure your former partner’s details are removed from any joint accounts. The credit history of all financial associations such as a spouse or anyone else you have a joint bank account or loan with can affect your credit rating.

March 23rd, 2016 | Andrew Hagger | News

Banking jargon continues to confuse savers and many are failing to understand common phrases, according to new research released by Aldermore today.

Aldermore asked savers to correctly identify the meaning of everyday savings acronyms. Almost six in ten (59%) failed to identify AER as Annual Equivalent Rate, while only half (54%) correctly identified the ISA as an Individual Savings Account.

Savers were also asked to identify the correct amount of gross interest earnt from placing £100 into a two-year fixed rate savings account paying 3% per annum. Just under a third (32%) worked out they would earn £6.09. Almost three-in-ten suggested it was £6.

The research also highlights what effect this lack of understanding has on their ability to save. While just under a third (32%) said they fully understood how savings account work and what they’re likely to earn, 31 per cent said they put money away because they think it’s important, but don’t fully understand the terminology.

When it comes to finding out more information, two-thirds say finance websites are the most likely source they would turn to if they wanted to understand savings accounts better. While almost two-fifths (37%) would go to their local bank or building society branch, just under a third (31%) suggested they would speak to friends or family.

Interestingly, almost four in ten (38%) savers said in the event of them being unable to find sufficient information they would move their savings elsewhere. Only four per cent said it would stop them from saving altogether.

Simon Healy, Aldermore’s Group Managing Director, Savings, said:

“Savings products should be easy to understand and easy to open. This research shows that many savers don’t fully understand all the language around their accounts and could ultimately be missing out on better returns. It is pleasing to see many are turning to online personal finance websites who not only provide a great resource, but highlight the best deals in the savings market too.

“As part of our aim to help customers realise their ambitions, we have put together a ‘Savings Glossary’ to help them understand what things mean and to help ensure they get the most from their money.”

March 12th, 2016 | Andrew Hagger | News

With just a few weeks to go until the personal savings allowance (PSA) comes into effect, new research from AA Financial Services reveals that 90% of savers don’t know what the allowance is and are struggling to determine where to put their savings after April.

Once the PSA was explained to survey respondents, almost half (49%) said they didn’t know what to do with their money come April, with the choice between ISAs and savings accounts causing most confusion.

One in six (16%) savers said they would only pay into a savings account  from April, and one in 14 (7%) said they would move money out of their ISA and into a savings account.

A spokesman for AA Financial Services, said, “The personal savings allowance is good news for savers, but widespread confusion about what it means for people’s money risks undoing the benefits.

“There will continue to be many differences between savings accounts and ISAs and the decision on what to do with your money isn’t as simple as comparing rates between saving accounts and ISAs.”

Important considerations for savers include:

• How an increase in interest rates will affect them.  For example, a basic rate taxpayer with £50,000 in a savings account earning 2% will generate £1000 interest – meaning all interest is protected by their PSA.  However, on the same balance, if rates increase to 3% they’ll generate £1500 – meaning £500 worth of interest will become liable to tax.
• How a pay rise could affect the value of their PSA.  A pay rise that takes you from a basic rate tax bracket to a higher rate tax bracket would halve your PSA from £1000 to £500.
• How they’d like to build their savings over the longer term.   For example, each tax year savers get an ISA allowance (currently £15,240 in 2015/16).  Consistently using your full ISA allowance over many years means you could build a substantial savings pot protected from both income and capital gains tax.
• How ISA allowances can now be inherited. A deceased spouse can now pass on their ISA allowance to their surviving partner, which they can use on top of their usual ISA allowance.

In spite of the confusion, there is a general willingness to save, with almost one in four (23%) people expecting it to be easier to save over the next few months.

March 11th, 2016 | Andrew Hagger | News

New research from Sainsbury’s Bank reveals that when it comes to their finances, the majority of people don’t feel better off than last year, and their main financial worry is the cost of living going up.

Key findings from the research include:

• 47% of people claim they feel no better about their finances this year than they did in 2015, 26% feel less confident about their finances, compared to 24% who feel more up-beat
• Only 19% of women believe they will be better off this year than in 2015, with 28% believing they will be worse off. The corresponding figures for men are 29% and 25%
• On a regional basis, 40% of people in London and 30% of adults in the South West feel better off than last year, compared to 16% and 27% who feel worse off. In the North West for example, 31% feel less confident, compared to just 19% who feel more confident
• In total, 73% of us admit to having some financial concerns and for 26% of people, their biggest money worry is the cost of living, this is followed by 13% who cited changes to their family’s income. Nearly one in ten (9%) said their main financial concern was not receiving a good enough return on their savings

March 11th, 2016 | Andrew Hagger | News

Top tips for protecting your home from winter weather:

• Check your boiler and heating system – If you haven’t done so already this year, get your boiler checked and/or serviced by a Gas Safe registered plumber.
• Roof tiles– Check for any cracked, missing or loose tiles and replace them. If a roof is in disrepair the weight of snow or high winds can prove to be hazardous.
• Keep the central heating on – Set the central heating to a minimum of 14 degrees Celsius throughout the winter. It helps prevent pipes freezing and frost damage.
• Repair damaged chimneys– Look for cracks around chimney pots and at the roof join, also for loose render and render that’s come away from the stack. Extreme weather can damage chimneys even further, so make sure they’re properly stable before it hits.
• Windows– Take a look at your window frames and fill any cracks and put on a coat of paint if needed. Extreme temperatures and wet weather can cause untreated wood to expand and rot, treating the window sills helps prevent water and frost damage.
• Insulation – Lag any pipes and water tanks in exposed areas such as lofts, garages and utility rooms to prevent pipes freezing and bursting.
• Guttering and drains – Clear your guttering and drains of any debris such as leaves, mud and stones; they can block easily and freeze up.
• Walls – Check the pointing in brickwork both on the main house, all outbuildings and garden walls, look for any loose stone or areas that are in need of repair.
• Fuse box and electrics– A home’s electrics are a major source of insurance claims. If you haven’t done so in a while, get a registered electrician to check your home’s fuse box and wiring.

Adam Powell from insurance provider Policy Expert commented:“It’s important to prepare your home as much as possible for whatever the weather might throw at it. A cold snap can ravage buildings so take the time this week to make sure you have the correct level of home insurance cover. Check the small print too – some policies may not cover sheds and outbuildings.”

March 11th, 2016 | Andrew Hagger | News

An alarming number of the UK’s working over-60s population are unprepared for their retirement, according to findings from a new white paper published by wealth management firm Sanlam.

The Which Way Forward? report, released a week ahead of the Government’s spring budget, suggests that an increasing ageing population, the demise of generous final salary schemes and the pension freedoms introduced last April are all contributing to a radically shifting retirement landscape. As a result, as many as 40% of non-retired over-60s today feel unprepared for their future.

The report, which uses qualitative research, compares the attitudes of 1,000 people who have retired in the last five years with 1,000 over-60s approaching retirement. It suggests there are many who still feel in the dark about their retirement, with 29% saying they weren’t aware of the new pension freedoms which the government introduced in April 2015.

The results are surprising, particularly given the new freedoms were intended to give future retirees more autonomy with their savings. Some 39% of over 60s admit that they are unaware of how much they currently have in their pension pot.

Running concurrently with this uncertainty, future retirees also now envisage a longer working life than previous generations. Less than 2% of pre-retirees anticipate retiring before the age of 61 and around 30% expect to still be working at 70 and beyond. In stark contrast, nearly half of those that were in retirement when questioned for the report had retired before the age of 61, and almost all had retired by 67.

The report suggests that fixed-age retirement has already become an outdated concept and will no longer be possible for the majority of the current working generation. Whilst Britons have traditionally worked towards a fixed retirement date, nearly half of pre-retirees now envisage partial retirement which is phased in over a few years, with only 3 in 10 expecting to retire outright or over a short period of time. The remainder of those questioned were undecided.

March 3rd, 2016 | Andrew Hagger | News

UK consumers are set to be back in the black this week as the balance of their current accounts begin to return to pre-Christmas levels.

According to data from TSB, March is the month when the Bank expects shoppers start to get back on top of their Christmas spending, having paid off their Christmas credit card bills and managed to come out of the un-festive red of their overdrafts.

However, the picture is not quite the same across the whole of the country with shoppers in Liverpool and Birmingham tending to pay off their Christmas debt quickest in January, compared to those in Essex and Thames Valley who won’t have paid off their spending until May.

By the time this month’s payday comes around, it is expected that only people in North and West London, East Anglia, Essex and the Thames Valley will still be battling with their festive spending as all other regions will have paid off their additional Christmas shopping.

Looking at credit cards alone, last year saw the average Brit increase their card balance by 2.7 per cent between October and December, the usual time for Christmas shopping. This is an increase from 2.1 per cent between the same period in 2014, showing a rise in consumer willingness to spend on plastic.

A spokesman for TSB, said: “Getting back in the black after Christmas can be difficult, particularly with temptation to spend in the January sales and the long weeks between December and January paydays, but it’s good to see many borrowers able to stay on top of their debts, even paying them off early.

“For those who are struggling to pay off any excess spending, it’s useful to make a monthly budget, keep a track of your daily spending and stick to a realistic plan to pay off the debt as soon as possible, making additional payments where possible. If people have high interest rates on their credit cards or overdrafts, it might be useful to shop around to see if it’s worth switching their debt to a lower rate.”

March 3rd, 2016 | Andrew Hagger | News

Since it launched in 2011, the Co-operative Insurance has saved its Young Driver policyholders over £7.4m in their first year of driving*.

Latest data from the Co-operative Insurance has found that on average its Young Driver policyholders receive £120 back in their pockets in the first year of taking out their policy.

The Young Driver Insurance policy works by rewarding policyholders for safe driving and the Co-operative Insurance was one of the first mainstream insurance providers to bring telematics to the mainstream market. It prices discounts based on four factors:

• Speed – keeping within limits
• Acceleration and Breaking – not accelerating/ breaking suddenly
• Cornering – driving in a controlled manner around corners
• Time of driving – certain times can be risker to drive at

Conversely, policyholders who drive badly may also see an increase in their premium policy price.

Steve Kerrigan, Head of Telematics at the Co-op Insurance said: “Young drivers can be labelled as being bad drivers, often unfairly. Our telematics-based product has enabled us to give back over £7.4 million to customers since 2011, who have proved that they are safe drivers.

“Keeping communities safe is one of our priorities. By offering a policy which aims to improve road safety as a result of incentivising good driving behaviours and giving driving tips to people who need driving improvement is a positive step to achieve this.”

February 24th, 2016 | Andrew Hagger | News

Mortgage and re-mortgage customers in their 40s are being caught by age restrictions, new research for the Nottingham Building Society warns.

Its study among mortgage brokers shows nearly two out of five have seen a rise in customers over 40 struggling to be approved for mortgages or remortgages.

And the research shows the problems will continue this year – more than a third (34%) expect the number of over-40s struggling to secure home loan deals will rise again in 2016.

The scale of the issue is underlined by research among customers who have been turned down for mortgages or remortgages in the past two years – around 17% of those who have been rejected say their age was a major reason. That rises to 21% among those aged 45 to 54.

Around one in four of those whose age counted against them say they were not able to borrow for long enough while the rest were turned away because either they or their partner were too old.

Older borrowers are suffering as lenders need to be able to prove customers have the income to afford loans which is not certain once they retire meaning people in their 40s wanting to borrow past retirement can struggle to get a mortgage.

Mortgage lenders are working hard to ease the rules which count against older borrowers – the Council of Mortgage Lenders and Building Societies Association are both working with members to make it easier and some lenders have increased their maximum ages.

Ian Gibbons, Senior Mortgage Broking Manager at Nottingham Mortgage Services (part of The Nottingham), said: “It is baffling for people in their early 40s to be told they are too old to have a mortgage and particularly so when the average age of first-time buyers is rising which means some could even be first-time buyers.

“There is no doubt creditworthy customers are being rejected and some are facing restrictions on their choice of mortgages.

February 24th, 2016 | Andrew Hagger | News

New research to support the launch of Sainsbury’s Bank’s  ‘Family Finance Report’ this week shows that, despite the emergence of green economic shoots and low inflation, the majority of people in the UK are not overly optimistic about their finances when compared to last year.

Despite wages increasing by around 2% in the past 12 months and consumer price inflation averaging 0.02% last year, the findings reveal that almost half of those interviewed claim they feel no better about their money matters this year than they did in 2015 while a quarter say they feel less confident.

73% of us admit to having some financial concerns whilst for 26% of people, their biggest money worry is the cost of living, and that’s not surprising with higher Council Tax bills on the way and the additional Insurance Premium Tax taking a further bite out of household budgets.

Nearly one in ten people said their main financial concern was not receiving a good enough return on their savings – I’m surprised that figure isn’t much higher considering the appalling rates currently on offer.

As if these concerns weren’t enough we’ve now got the possibility of the UK voting to leave Europe this summer and the potential financial implications that may bring.