Last updated: 4 November 2026. General information for the UK, not regulated financial or debt advice.
If you’re lying awake worrying about credit card bills, a loan, an overdraft that never seems to clear, or a pile of letters you haven’t opened yet, you’re not alone. Debt rarely feels like one problem. It’s payments to juggle, interest to avoid, a credit score to protect and a constant question in the back of your mind: what do I pay first?
The good news is that debt gets easier to manage once you break it into clear steps. You work out exactly what you owe, protect the bills that matter most, make a plan you can actually stick to, and get free help if the numbers simply don’t add up. This guide walks you through each of those steps in plain UK terms, with no judgement and no sales pitch.
I’m not a debt adviser, and nothing here replaces one. What I can do is explain how debt and credit work in the UK, point you to the official sources I checked, and show you the free organisations that can step in when you need more than a guide.
If you can’t afford your rent, mortgage, council tax or energy bills right now, skip straight to free debt advice. National Debtline (0808 808 4000) and StepChange (0800 138 1111) are free and confidential.
Jump to what you need
- I want to check my credit score → How to check your credit score for free
- I don’t know which bills to pay first → Priority vs non-priority debts
- I need a payoff plan → How to get out of debt: step-by-step plan and snowball vs avalanche
- I can’t pay my bills this month → What to do first
- I have credit card debt → How to pay off a credit card faster and 0% balance transfers
- I want to improve my credit score → 15 practical UK steps
- Debt collectors or court papers → Dealing with debt collectors and bailiffs and what a CCJ is
- I’m behind on council tax → Council tax arrears: what happens and what to do
- I need money before payday → Payday loan alternatives
- I want a mortgage but my credit isn’t perfect → Mortgage with bad credit
- I’m new to the UK or have no credit history → Build credit after moving to the UK
- I need free, confidential help → Free debt advice UK
In this guide
- What to do first: the 5-step debt reset
- What counts as debt in the UK
- Priority debts vs non-priority debts
- How to make a debt list and budget
- Your credit score explained
- Credit cards and borrowing
- How to pay off debt: snowball vs avalanche
- Should you save or pay off debt first?
- If you’re struggling
- Free debt advice in the UK
- Common debt and credit mistakes
- People also ask
What to do first: the 5-step debt reset
When everything feels urgent, it helps to have an order to follow. These five steps work whether you owe £500 on a credit card or several thousand across loans, cards and overdue bills.
- List every debt. Write down who you owe, the balance, the interest rate (APR) and the minimum monthly payment. Include overdue bills, not just credit.
- Protect your priority debts. Rent or mortgage, council tax, energy and a few others carry the most serious consequences if you fall behind. Make sure these are covered before anything else.
- Check your credit report. Look for mistakes, accounts you don’t recognise and old addresses. Checking your own report doesn’t harm your score.
- Choose a payoff method. Pay the minimum on everything, then put any spare money towards one debt at a time using the snowball or avalanche method.
- Get free advice if your essentials aren’t covered. If your income doesn’t stretch to your priority bills, a free debt adviser can talk you through options you may not know exist.
Here’s the quick version of the two payoff methods. There’s more on choosing between them further down, and a worked example in debt snowball vs avalanche.
| Method | How it works | Best for | Main advantage |
|---|---|---|---|
| Debt snowball | Pay off the smallest balance first | People who need motivation to keep going | Quick wins you can see |
| Debt avalanche | Pay off the highest interest rate first | People focused on paying the least interest | Usually cheaper overall |
What counts as debt in the UK
Debt is any money you owe and have to pay back. Some of it is planned borrowing you chose, like a mortgage or car finance. Some of it is money you’ve fallen behind on, like council tax arrears or an unpaid energy bill.
Common types of debt in the UK include:
- Credit cards and store cards
- Overdrafts (arranged or unarranged)
- Personal loans from banks, building societies or online lenders
- Buy Now, Pay Later (Klarna, Clearpay, PayPal Pay in 3 and others)
- Car finance (hire purchase or PCP)
- Catalogue and home credit
- Mortgages and secured loans
- Arrears on rent, council tax, energy, water, phone or broadband
- Money owed to HMRC or DWP, such as tax bills or benefit overpayments
- Money borrowed from family or friends
Student loans (Plan 1, 2, 4, 5 and postgraduate) work differently. Repayments come out of your salary based on what you earn, they don’t show on your credit file, and they don’t chase you if your income drops. If you’d like to see your own numbers, my student loan repayment calculator shows what you pay each month.
Priority debts vs non-priority debts
This is the single most important idea in this guide. The debt with the highest interest rate is not always the one to pay first. Some debts have far more serious consequences if you fall behind, even if the amount is small.
MoneyHelper splits debts into two groups:
| Priority debts | Non-priority debts |
|---|---|
| Mortgage, rent and loans secured on your home | Credit cards and store cards |
| Council tax (or rates in Northern Ireland) | Overdrafts |
| Gas and electricity | Personal loans |
| Court fines | Catalogue, home credit and in-store credit |
| TV Licence | Payday loans |
| Child maintenance | Water and sewerage bills |
| Income Tax, National Insurance and VAT | Money borrowed from friends or family |
| Hire purchase, if the item is essential (for example, a car you need for work) | |
| Missed payments owed to DWP or HMRC |
Why priority debts come first: falling behind can lead to losing your home, bailiffs (enforcement agents), your energy supply being affected, or court action. In the most serious cases, unpaid council tax or TV Licence can even lead to prison. Non-priority debts still matter, and they can damage your credit file and end up in court, but the consequences are usually less severe and slower.
Water is on the non-priority list because water companies can’t cut off household supply. That doesn’t mean you should ignore it: ask your water company about a social tariff or payment plan.
What this means in practice (more in my full guide to priority vs non-priority debts): if you can only afford some of your bills this month, cover your priority debts first, then pay what you can towards the rest and contact those lenders straight away.
How to make a debt list and budget
You can’t make a plan until you can see the whole picture, and for many people this is the hardest step. It’s normal to feel a knot in your stomach when you add it all up. Do it anyway: the number in your head is usually scarier than the real one.
Step 1: write your debt list
Make a simple table with these columns:
| Who I owe | Type | Balance | Interest rate (APR) | Minimum payment | Due date | Priority? |
|---|---|---|---|---|---|---|
| Example: Council | Council tax arrears | £420 | 0% | £70 | 1st | Yes |
| Example: Card A | Credit card | £2,300 | 24.9% | £69 | 15th | No |
These are example figures to show the layout, not real accounts.
Where to find the numbers:
- Credit cards and loans: your latest statement or banking app
- Overdue bills: the most recent letter, or call and ask for the balance
- Anything you’ve forgotten: your credit report (see how to check it free)
For the full walk-through, see my step-by-step plan to get out of debt. If you’d rather fill in a ready-made sheet, my Debt Payoff Progress Tracker has a debt list, a payoff order page and a progress chart you colour in as balances drop. (It’s my own product.)
Step 2: work out what you can afford
Next, compare what comes in with what goes out. Start with your take-home pay, then subtract essentials: housing, council tax, energy, food, travel to work, childcare and insurance.
Whatever is left is what you can put towards debt. If you’ve never budgeted before, the 50/30/20 rule is a simple starting point for splitting your take-home pay, and my 50/30/20 calculator does the maths for you. When you have debt, the “savings” slice usually becomes “savings and extra debt payments”.
Step 3: find a bit more breathing room
Even small changes add up when every pound goes towards debt. Some places to look:
- Cancel subscriptions you’ve forgotten about
- Cut your grocery bill
- Check if your energy Direct Debit is too high
- Check for money and benefits you’re missing
- Sell things you no longer use
If your spending is regularly higher than your income, my money makeover guide walks through a full reset.
Your credit score explained
Your credit score is a number that sums up how risky you look to lenders, based on the information in your credit report. It affects whether you’re accepted for credit cards, loans, mortgages, mobile phone contracts and sometimes even rental homes, and what interest rate you’re offered.
Who holds your credit file?
In the UK, your credit history is held by credit reference agencies. The three main ones are Experian, Equifax and TransUnion, and MoneyHelper now also lists a fourth, Crediva. Each one collects slightly different information and uses its own scoring scale, so your score will be different on each one. That’s normal, not a mistake. See what counts as a good credit score in the UK for each agency’s bands.
Lenders don’t see your score from these sites. They see your report and apply their own rules. So it’s more useful to focus on what’s in the report than on the number itself.
How to check your credit report for free
You can check your credit report with each agency for free. Free apps and websites that show your report include:
- Experian: free account on experian.co.uk
- Equifax: through ClearScore
- TransUnion: through Credit Karma
- Crediva: through its own website
When you check, look for:
- Wrong personal details: old addresses, misspelt names, wrong dates of birth
- Accounts you don’t recognise: could be a mistake or fraud
- Late payments or defaults that shouldn’t be there
- Links to people you’re no longer financially connected to, such as an ex-partner you once had a joint account with
Checking your own report does not lower your score. It’s recorded as a “soft search”, which lenders can’t see.
What affects your credit score?
| Helps your score | Hurts your score |
|---|---|
| Paying every bill on time | Late or missed payments |
| Being on the electoral roll at your current address | Not being registered to vote |
| Using a small part of your available credit | Using most or all of your credit limits |
| A long, steady credit history | Lots of applications in a short time |
| Stable address history | Defaults, CCJs, IVAs, DROs or bankruptcy |
How long does negative information stay on your file?
See my guides to missed payments (including how to dispute one that’s wrong), defaults and CCJs for more.
According to MoneyHelper, accurate negative information, such as a missed payment, usually stays on your file for six years. Defaults, CCJs, Debt Relief Orders and bankruptcy also normally drop off after six years. The impact usually fades over that time, especially if your recent history is good.
There’s one useful exception for CCJs in England and Wales: if you pay the full amount within one month of the judgment, you can apply to have it removed from the register and your credit file.
How to improve your credit score
There’s no instant fix, and you should be wary of anyone who promises one. (Full guide: how to improve your credit score.) You don’t need to pay a “credit repair” company either, because everything they do, you can do for free. The steps that help most:
- Register to vote at your current address.
- Fix any mistakes by raising a dispute with the agency that shows them.
- Pay everything on time. Set up Direct Debits for at least the minimum payment.
- Keep balances low compared with your credit limits.
- Space out applications, and use eligibility checkers (soft searches) before applying.
- Close links to old financial associates if you no longer share any credit with them.
- Add a Notice of Correction if past problems had a reason that no longer applies, such as illness or redundancy. You have to ask each agency separately.
If you rent, here’s how renting affects your credit score. If you’re getting ready to buy a home, read can you get a mortgage with bad credit? (with a 12-step credit checklist). My first-time buyer mortgage checklist includes the credit file checks to do a few months before you apply, and my guide to bank statements for a mortgage explains what lenders may look at.
Credit cards and borrowing
Credit isn’t good or bad on its own. A credit card can be a useful tool if you clear it every month, and an expensive trap if you don’t. Here’s what to understand before you borrow, or before you decide what to do with borrowing you already have. New to cards? Start with credit cards for beginners.
Using a credit card safely
- Pay the full statement balance by the due date and you won’t pay interest on purchases.
- Set up a Direct Debit for at least the minimum, so you never miss a payment by accident.
- Avoid cash withdrawals. They usually carry a fee and interest from day one.
- Eligible purchases costing more than £100 and up to £30,000 made on a credit card are protected under Section 75 of the Consumer Credit Act, which can help if something goes wrong.
I’ve written about cashback and reward credit cards, but rewards only make sense if you pay the balance in full every month. If you’re carrying a balance, the interest will almost always outweigh the cashback.
Offered a store card at the till, or a higher limit by your card provider? See store cards vs credit cards and should you accept a credit limit increase (or close an unused card)?
APR and minimum payments
The APR (annual percentage rate) is the yearly cost of borrowing, including interest and some fees. The “representative APR” in adverts is what at least 51% of accepted customers get, so the rate you’re offered may be higher.
Minimum payments keep you in debt for a long time. They’re set low so the account stays affordable, but much of each payment goes on interest. If you only ever pay the minimum, a balance of a few thousand pounds can take many years to clear and cost a lot in interest.
Under FCA rules, if you’ve paid more in interest, fees and charges than off your actual balance over 18 months, your card provider has to contact you and encourage you to pay more if you can. If you can’t, they should help you, for example by reducing or freezing interest.
A simple fix (more in how to pay off a credit card faster): pick a fixed monthly amount that’s higher than the minimum, set it as your Direct Debit, and leave it there even as the minimum falls.
Balance transfers: when they help and when they don’t
A 0% balance transfer card lets you move existing credit card debt to a new card and pay no interest for a set period. It can save a lot of money, but only if you go in with a plan. My 0% balance transfer guide has a worked example.
A balance transfer can help if:
- You can be accepted (it needs a credit application, which is a hard search)
- The transfer fee (often a percentage of the balance) is less than the interest you’d save
- You can pay off the whole balance before the 0% period ends
It can backfire if:
- You keep spending on the old card and end up with two balances
- You only pay the minimum and the 0% period runs out with debt left over
- You miss a payment, which can end the 0% deal early
To work out a monthly payment that clears it in time: balance ÷ number of months at 0% = monthly payment. For example, £1,800 over 18 months is £100 a month.
Buy Now, Pay Later and your credit score
Buy Now, Pay Later (BNPL) lets you split a purchase into instalments, often interest-free. Since 15 July 2026, most new BNPL agreements in the UK are regulated by the FCA. That means lenders have to check you can afford it, give you clear information before you sign, help you if you’re struggling, and you can complain to the Financial Ombudsman. Agreements taken out before that date aren’t covered.
What it means for your credit file depends on the provider. Some BNPL providers report your agreements and payments to credit reference agencies, so missed payments can harm your score, and lots of active plans may make lenders think twice. Before using BNPL, check the provider’s own information on credit reporting and late fees, and treat each plan as a real debt. My Buy Now, Pay Later and your credit score guide shows which agencies Klarna, Clearpay and PayPal report to.
Signs borrowing is becoming a problem
- Using credit to pay for food, bills or other debts
- Only ever paying the minimum
- Being close to your limit on every card
- Borrowing from one lender to pay another
- Feeling anxious when you open your banking app
If any of these sound familiar, it’s a good time to make a plan, and to look at the free advice section below.
How to pay off debt: snowball vs avalanche
Once your priority debts are covered and every account has at least its minimum payment set up, you can start clearing debts one by one. The two best-known methods both work. The right one is the one you’ll stick with.
The debt snowball
List your non-priority debts from smallest balance to largest. Pay the minimum on all of them, then put every spare pound towards the smallest. When it’s cleared, roll that payment into the next smallest, and so on. The payment you’re putting towards debt “snowballs” as each one disappears.
Why it works: you clear a debt quickly, which feels good and keeps you going. If you’ve tried and given up before, this can be the better choice.
The debt avalanche
List your debts from highest interest rate to lowest. Pay the minimums, then put extra money towards the most expensive debt first.
Why it works: you pay less interest overall, and usually clear everything a little sooner. It suits people who are motivated by the numbers.
Which should you choose?
| If you… | Try |
|---|---|
| Need quick wins to stay motivated | Snowball |
| Want to pay the least interest | Avalanche |
| Have one card with a much higher rate than the rest | Avalanche |
| Have several small balances that feel overwhelming | Snowball |
You can also mix them: clear one or two tiny balances first for a quick boost, then switch to the highest rate.
Whichever you pick, write the order down and track your progress. Seeing balances shrink is surprisingly motivating. My Debt Payoff Progress Tracker is set up for both methods.
Should you save or pay off debt first?
It’s tempting to throw every penny at debt. But if you have no savings at all, one broken boiler or car repair can send you straight back to the credit card.
A sensible middle path for most people:
- Build a small emergency buffer first, for example £500 to £1,000. My guide to building a £1,000 emergency fund shows how, and the emergency fund calculator shows how many months your savings would cover.
- Then focus on high-interest debt. Savings accounts rarely pay as much interest as credit cards charge, so clearing expensive debt is usually the better “return”.
- Keep paying into a workplace pension if your employer adds money. Opting out usually means losing the employer contribution.
- Grow your savings again once expensive debts are gone.
If you already have a lot in savings and expensive debt alongside it, it may make sense to use some savings to clear the debt. Keep enough back for emergencies so you’re not forced to borrow again.
If you’re struggling
If you’re behind on bills or can’t make this month’s payments, please don’t ignore the letters. Problems usually get more expensive and more stressful the longer they’re left, and lenders are expected to help customers who are in financial difficulty.
What to do if you can’t pay your bills this month
The short version is below. My full checklist is in can’t pay your bills this month?
- Cover priority debts first (see the table above).
- Contact your lenders before you miss a payment if you can. Explain what’s happened and ask what help they offer: a payment break, a reduced payment plan or frozen interest.
- Don’t take out new high-cost borrowing to cover a gap, especially payday loans or unarranged overdrafts. Try these payday loan alternatives first.
- Check you’re getting all the help you’re entitled to, from benefits to council tax discounts. My council tax discount calculator and free money help guide are good places to start. Already behind on council tax? Read council tax arrears.
- Speak to a free debt adviser if you can’t see a way to cover your essentials.
Dealing with creditors and debt collectors
Full guides: how to negotiate a payment plan (with a letter template) and your rights with debt collectors and bailiffs.
When you contact a lender or collector, it helps to be prepared:
- Have your debt list and budget to hand, showing what you can realistically afford
- Offer an amount you can keep up, not one you’ll struggle with next month
- Ask for everything in writing, and keep copies of letters and notes of calls
- If a debt has been sold, ask the new company to confirm the balance and that they own it
Debt collection agencies are regulated by the FCA and must treat you fairly. They shouldn’t harass you, mislead you or pressure you to pay more than you can afford. A debt collector from a collection agency is not the same as a bailiff (enforcement agent), and they don’t have the power to enter your home or take your belongings. Enforcement agents can only be involved after certain court or council steps, which is another reason to deal with priority debts and court papers quickly.
If you receive court papers (for example, a claim form), don’t ignore them. My guide to what a CCJ is explains what to do, and what happens if you ignore a debt shows the whole timeline. There are strict deadlines to respond, and a free adviser can help you do it.
Breathing Space
In England and Wales, the Breathing Space scheme can give you up to 60 days of protection. During that time most interest and charges are frozen and most creditors have to pause enforcement and stop contacting you. You can only apply through a debt adviser, and you still need to keep paying ongoing costs like rent, mortgage and utilities. There’s a separate mental health crisis breathing space for people receiving crisis treatment.
Formal debt solutions
If your debts are too big to repay in a reasonable time, a debt adviser may talk you through formal options. I compare them in more detail in DRO vs IVA vs bankruptcy, and once one ends, here’s how to rebuild your credit. Here’s a brief overview of the main ones in England and Wales (Scotland and Northern Ireland have their own systems):
| Option | What it is | Key point |
|---|---|---|
| Debt management plan (DMP) | An informal agreement to pay creditors a smaller amount you can afford | Not legally binding; free DMPs are available from debt charities |
| Debt Relief Order (DRO) | For people with low income and few assets; most debts are written off after 12 months | No fee; debts below £50,000; a car must be worth less than £4,000 |
| Individual Voluntary Arrangement (IVA) | A legally binding agreement to repay part of your debt over a set time, usually five or six years | Set up by an insolvency practitioner; fees apply |
| Bankruptcy | For debts you can’t repay; your assets may be used to pay creditors | Costs £680 to apply |
Each option affects your credit file and can have other consequences, for example on your home or job. Get free advice before choosing any of them, and be cautious of companies that advertise “write off your debt” deals or charge fees for things free charities do.
Free debt advice in the UK
You never need to pay for debt advice. These organisations are free, confidential and won’t judge you (more detail in my free debt advice UK guide):
- National Debtline (England and Wales): 0808 808 4000, or webchat at nationaldebtline.org
- StepChange Debt Charity: 0800 138 1111, or online at stepchange.org
- Citizens Advice: 0800 144 8848 (England), 0800 702 2020 (Wales), 0800 028 1456 (Scotland)
- MoneyHelper debt advice locator: find free advice near you, by phone or online
- Scotland: Advice Direct Scotland and the Accountant in Bankruptcy (aib.gov.uk)
- Northern Ireland: Advice NI and nidirect
GOV.UK keeps a full list on its free debt advice page. Numbers and opening hours can change, so check there before you call.
Before you call, it helps to have your debt list, your latest payslip or benefit statement, and a rough idea of your monthly spending. Don’t worry if it’s not perfect: advisers are used to helping people who are starting from scratch.
Common debt and credit mistakes to avoid
- Ignoring letters. Problems grow faster when they’re left unopened.
- Paying the loudest creditor first instead of your priority debts.
- Only paying the minimum on credit cards for years.
- Borrowing to repay borrowing, especially with payday loans.
- Applying for lots of credit at once after being turned down.
- Paying for things that are free, like credit repair or debt advice.
- Having no buffer at all, so every surprise bill goes on credit.
- Closing your oldest credit card without thinking about how it affects your available credit.
- Using BNPL for lots of small purchases and losing track of payment dates.
Debt and credit UK: people also ask
How can I get out of debt in the UK?
Start by listing every debt with its balance, interest rate and minimum payment. Make sure priority bills like rent, council tax and energy are covered first. Then pay the minimum on everything else and put any spare money towards one debt at a time, using the snowball or avalanche method. If you can’t cover your essentials, contact a free debt adviser like National Debtline or StepChange, who can talk you through options such as payment plans or a debt solution.
What is a good credit score in the UK?
There isn’t one single number, because Experian, Equifax and TransUnion each use their own scale, and lenders use their own rules too. Each agency explains its bands (such as “fair”, “good” or “excellent”) on its own website. What matters more is what’s in your report: on-time payments, low balances compared with your limits, being on the electoral roll and no recent defaults. Focus on those and the scores usually follow.
How can I improve my credit score fast?
The quickest wins are registering to vote at your current address, correcting any mistakes on your report, and reducing your credit card balances compared with your limits. These can show up within a month or two, once lenders report new information. Paying on time every month helps most over the long run. Be wary of anyone promising an instant fix, and don’t pay for “credit repair” services, because you can do everything yourself for free.
Does checking my credit score lower it?
No. Checking your own credit report or score is a soft search. It’s recorded on your file, but lenders can’t see it and it doesn’t affect your score. You can check as often as you like. Hard searches are different: these happen when you actually apply for credit, and several in a short space of time can make lenders cautious. Eligibility checkers use soft searches, so they’re a safer way to test your chances first.
What debts should I pay off first?
Pay priority debts first: mortgage or rent, council tax, gas and electricity, court fines, TV Licence, child maintenance and tax owed to HMRC. These carry the most serious consequences, such as losing your home or bailiff action. After that, keep up minimum payments on credit cards, loans and overdrafts, and put extra money towards either the smallest balance (snowball) or the highest interest rate (avalanche).
Is it better to save or pay off debt?
For most people, it’s best to do a bit of both. Build a small emergency buffer of around £500 to £1,000 first, so a surprise bill doesn’t go straight on a credit card. Then focus on high-interest debt, because the interest you’re paying is usually much higher than anything you’d earn in a savings account. Keep paying into a workplace pension if your employer contributes, as you’d otherwise lose that free money.
Does a balance transfer affect your credit score?
It can, in a few ways. Applying for a new card means a hard search, which may cause a small, temporary dip. A new credit limit can lower your overall credit use, which can help over time. Moving the debt and paying it down steadily usually helps your file in the long run. Missing a payment, spending again on the old card, or making several applications at once can all harm it.
What happens if I miss a credit card payment?
You’ll usually be charged a late fee and interest, and the missed payment may be reported to credit reference agencies, where it can stay for six years. If you were on a 0% deal, you may lose it. Pay as soon as you can and contact your card provider, especially if it’s likely to happen again. If you miss several payments, the account may default, which has a bigger impact on your credit file.
Can debt collectors take my belongings?
Debt collectors working for a collection agency can’t take your belongings or enter your home. They can only ask you to pay. Enforcement agents (bailiffs) are different and can only act after a court judgment or, for some debts like council tax, a liability order. If you’re worried about bailiffs, contact a free debt adviser straight away, as there are rules about what they can and can’t do.
What is a priority debt?
A priority debt is one where not paying can lead to serious consequences, like losing your home, having your energy supply affected, bailiff action or, in rare cases, prison. In the UK, priority debts include mortgage or rent, council tax, gas and electricity, court fines, TV Licence, child maintenance, Income Tax and VAT, and essential hire purchase. They’re about the consequences, not the size of the debt or the interest rate.
How do I get free debt advice in the UK?
You can get free, confidential debt advice from National Debtline (0808 808 4000, England and Wales), StepChange (0800 138 1111) and Citizens Advice. MoneyHelper has a locator to find advice near you, and GOV.UK lists all the free services. You never need to pay for debt advice. Have a list of your debts, your income and your regular spending ready before you call.
Can I get a mortgage with bad credit?
It may still be possible, but you’ll usually have fewer lenders to choose from and may need a bigger deposit or pay a higher rate. Lenders look at what happened, how long ago and what your finances look like now. Check all your credit reports, fix any mistakes and pay everything on time for as long as possible before applying. An independent mortgage broker can tell you which lenders are likely to consider you. More in my guide to getting a mortgage with bad credit.
How long does debt stay on my credit file?
Accurate negative information, like missed payments, defaults, CCJs, Debt Relief Orders and bankruptcy, usually stays on your credit file for six years. The impact tends to fade as it gets older, especially if your recent payments are on time. If you pay a CCJ in full within a month of the judgment in England and Wales, you can apply to have it removed altogether.
What is the debt snowball method?
The debt snowball means paying off your debts from the smallest balance to the largest, regardless of interest rate. You pay the minimum on everything, then put extra money towards the smallest debt. When it’s cleared, you add that payment to the next one. It costs a little more in interest than the avalanche method, but the quick wins help many people stay motivated.
What is the debt avalanche method?
The debt avalanche means paying off your debts from the highest interest rate to the lowest. You pay the minimum on everything, then put any extra money towards the most expensive debt. It usually saves the most interest and can help you become debt-free sooner. It works best if you can stay motivated even when your first debt takes a while to clear.
Is Klarna bad for your credit score?
Not automatically. Since 15 July 2026, most new Buy Now, Pay Later agreements, including Klarna’s, are regulated by the FCA, with affordability checks before you borrow. Whether it affects your credit file depends on how the provider reports to credit reference agencies. Paying on time is unlikely to cause harm, but missed payments can, and lots of active plans may make lenders cautious. Check Klarna’s own information on credit reporting before you use it.
Your next step
You don’t need to fix everything today. Pick one thing from this list and do it this week:
- Write your debt list. Just the names, balances and minimum payments. That’s it.
- Check one credit report for free and look for anything that’s wrong.
- Make sure your priority bills are covered this month.
- Call National Debtline or StepChange if you can’t cover your essentials.
Then come back for the next step. If you’d like a little help staying on track, my free 7-Day Financial Reset Kit gives you one 15-minute task a day, and day 7 is your debt plan. And when you’re ready to start paying things off, the Debt Payoff Progress Tracker is there to help you see every pound of progress.
You can also try my free UK money calculators to check your budget, take-home pay and savings.
This guide is general information, not financial or debt advice. I’m not a debt adviser. If you’re struggling with debt, please speak to one of the free, confidential services above.