Are you a debt diva?

If you’re one of the many women who see shopping as recreation, you could be in for a nasty shock.

A recent survey by Cosmopolitan found that 64 per cent of its readers were in debt, with more than half of these owing upwards of £5,000 on credit or store cards. This new generation of debt divas thinks nothing of splurging on designer labels even when they know they’re spending more than they earn. As a result, the Consumer Credit Counselling Service says that the proportion of young women asking for help with debt has doubled in the past ten years.

These tips could help you avoid serious financial trouble.

Face up to the facts

Debt is a big issue – collectively, British adults owe more than a trillion pounds. But it doesn’t have to get out of control. The first step is to clarify how much you owe. Go through your bank statements and bills and factor in anything you owe to friends and family. Check your credit report, which contains details of your credit accounts, such as loans, cards and mortgages. It can also remind you of borrowing you’d forgotten about. You can see your Experian credit report for free with a 30-day trial of CreditExpert.

Go on a debt diet

Take at close look at where your money’s been going over the past year. You have to find ways of cutting back, so approach this as you would a conventional diet. Instead of counting calories, write down everything you spend, from bus fares and coffees to home insurance and your TV licence. Work out a new weekly budget but remember you also need to treat yourself occasionally or you’ll eventually fall off the wagon. Set aside a little extra cash to compensate for this.

Change your spending habits

Go through your wardrobe – you will probably be shocked to see how many clothes you own and how few you actually wear. When you’re desperate for a new-clothes fix, try charity shops instead of hitting the high street. At weekends, go for a country walk with friends, join some clubs and societies or take up a new sport instead of indulging in retail therapy.

Make the most of being a woman

On average, women under 40 pay about 17 per cent less on car insurance than men. Despite the clichés about women drivers, they are less likely to have expensive accidents than men. Shop around for the best deals – many companies specifically target female customers. Women can often get discounts in bars and clubs if you fancy a girls’ night out.

Get the best out of the web

Price comparison sites exist for almost every product imaginable and can save you a lot of money. Don’t ignore voucher sites either – they offer discounts on everything from restaurants to holidays. Finally, search online for specific items you’ve spotted in the shops. They will probably be cheaper in cyber space than they are in the mall.

Think like your bank manager

You wouldn’t lend money to someone you suspected couldn’t pay it back – nor will banks, mortgage and credit card companies. A key part of their process is to review your credit report and assess whether you’re a responsible borrower and can afford a new set of repayments. You should do the same. Ensure that all the information your report contains is up to date and accurately reflects your circumstances, as a single slip or misunderstanding could affect your chances of getting the deals you want.

Climb the credit status ladder

There are several easy steps you can take to improve your credit rating. Register to vote at your current address, get any clerical errors corrected by the relevant lender, close down unused accounts and spare credit cards and add a note to your report to explain any periods of financial difficulty. Finally, check your credit report every month to monitor your progress and look for unfamiliar entries, such as new applications you didn’t make – these could indicate attempted ID fraud and should be queried immediately.

Stand on your own two feet

If you share a joint account, such as a card or mortgage, it creates a financial association and means that lenders may check your partner’s credit report when you apply to them – the logic is that his or her financial situation could affect your ability to make repayments. If you’ve split from someone with whom you had a joint account, get it closed, reapportion any debt and inform the credit references agencies that hold your credit report – Experian is the UK’s largest.

Get free advice

If you’re finding it hard to keep up your repayments, don’t be tempted to skip them. Missed payments stay on your credit report for at least three years and can affect your ability to borrow. Talk to your lenders and arrange a more affordable schedule or a payment holiday, if possible. Don’t think you can walk away from your debts and forget them by taking out an IVA or going bankrupt – the evidence stays on your credit report for at least six years and will make lenders ultra-cautious for the duration. Before taking such drastic action, get free advice on how to manage and reduce your debts from Citizen’s Advice, at www.adviceguide.org.uk, National Debtline at www.nationaldebtline.co.uk and the Consumer Credit Counselling Service at www.cccs.co.uk.

Keep your spirits up

Don’t see this is a negative process – you are taking charge of your life and money. If you want to monitor your progress, you can order your Experian Credit Score for £5.95 to get an idea of how your credit rating is doing – and how lenders may react to any new requests for credit. You’ll be a lot happier once you know you’re on top of your debts – and you’ll feel a real sense of achievement. You can buy your Experian Credit Score with a 30-day free trial of CreditExpert, the online credit monitoring and ID protection service.