Debt & Credit
What a credit score actually is
There's no single official number — each agency (Experian, Equifax, TransUnion) scores you differently. What moves it: paying on time, low credit utilisation, length of history, and being on the electoral roll.
Good debt vs bad debt
Debt that buys an appreciating asset or boosts your earnings (a sensible mortgage, sometimes a student loan) differs from high-interest debt on depreciating things (payday loans, credit-card balances you can't clear). The cost is the interest rate, not the borrowing itself.
APR and compound interest working against you
APR is the yearly cost including fees. Example: a £2,000 balance at 24.9% APR paying only the minimum can take many years and cost well over £1,000 in interest, while the same £2,000 cleared in 12 months costs a fraction of that. Interest charged on interest is compounding in reverse.
Two payoff strategies
Avalanche: attack the highest-APR debt first (cheapest mathematically). Snowball: clear the smallest balance first (best for motivation). Both work — pick the one you'll actually stick to.
A 0% balance-transfer card can pause interest while you clear the balance — but only if you clear it before the deal ends and avoid new spending.
When debt feels unmanageable
Free, confidential, regulated help exists: StepChange, National Debtline and Citizens Advice. Options include a Debt Management Plan, an IVA, a Debt Relief Order or bankruptcy — each has serious long-term consequences, so get free advice first.
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