FOOL'S EYE VIEW
Living by the Book - Don't Stop Now!

By Jane Mack (TMFJane)
October 19, 2001

Oh dear. Katherine's getting a bit bored with keeping up with her spending diary even if she does admit that it is helping her to see where all her money is going. (You'll recall she made a note of everything she spent throughout September so we could track it week by week throughout October):

Week Three: This week I've started to get fed up writing everything down. And how did I manage to spend so much in Sainsburys?

This diary is making me think about where my money goes but it also makes me feel guilty. Like when I went to buy those chairs. They were far from the most expensive I could have bought and I do need them – have a table but no chairs – friends coming to dinner on Friday etc etc. See I 'm justifying again!

I suspect she's only continuing with her diary at this point because she promised me she would, but it's true that it can get quite tedious writing absolutely everything down. If I took any exercise other than jumping to conclusions, I would imagine it must be a bit like hitting the 'wall' when running a marathon. However, it's worth sticking with - if she'd stopped here she wouldn't have known that by the end of the month she'd overspent her pay cheque by £213.

You may remember that a few months ago, Katherine consolidated all her debts into a £3,000 loan so, by overspending, she's made the classic mistake of thinking that she's 'cleared' her debts and, consequently, has begun running up some more. The loan has not, of course, cleared her debts at all – she's simply moved them from her credit card and overdraft, which is giving her the impression that she's now got money to spend.

One very valid point that has been raised since I criticised the high cost of her consolidation loan (interest rate - 19.9%!) is that Katherine may not have been able to get a cheaper one because of a poor credit rating. SuzanneSS wrote: "It's very easy to say there are all these cheap rates out there, but they are often not available to the people who are actually in need of them".

This is true but it's also the case that people are turned down for reasons that don't even relate to their own credit history - and they don't realise it. It could be something as simple as not being on the electoral roll, for example - a problem that is easily fixable by making a phone call to the council. In fact, I would guess that this was Katherine's problem since her credit rating is fine - it was probably just because she wasn't on the electoral roll.

Another reason for being turned down is because you share your home address with someone who has the same surname as you (relative or spouse usually) and they're the ones with the bad credit record. Lenders tend to think this means finances are shared when this may not be the case. It's another easily fixable problem as you can 'disassociate' yourself from that person by writing to the credit reference agencies, so lenders only look at your own record.

When making an application for a loan or credit card, the initial credit scoring system used by lenders is carried out by computer, so you get an automatic rejection if the numbers don't meet their criteria. However, if you phone up to query the rejection, a human being looks at it, which means you've got a chance to find out what the problem is and of sorting it out. (They don't have to tell you why you were refused but sometimes they will if you ask nicely).

The sensible thing to do before applying for a low interest credit card or loan is to ensure the basics are sorted out. Make sure you're on the electoral roll. Apply for your credit files from Experian and Equifax so that you can check that the information on them is correct and that you're not being linked with someone who's got a bad credit record. Both websites tell you how to go about it.

Anyway, back to Katherine. Her expenditure so far looks like this:

Week One
Week Two
Week Three

I'm a bit perturbed by all the money she spent buying breakfast and lunch in Week Three when she'd just done a big shop at Sainsburys. Look at all those rounds of toast – she could have bought about five loaves for that kind of money – but as we tackled her on that sort of thing last week I won't harp on about it, for once!