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Page last updated at 07:39 GMT, Friday, 30 January 2009
Debt diaries: Paul Lackie's story

By Catherine Burns
Newsbeat reporter

Rewind back one year: people were just starting to talk about the credit crunch but no-one knew just how far the global economy was going to dive. Newsbeat listener Paul Lackie got in touch with some money worries of his own. He couldn't get any credit and wanted to get out of debt. We hooked him up with an expert, Chris Tapp, from the charity Credit Action. But has Paul managed to sort himself out?

Paul's trying to pay off as much of his debt as he can

When Newsbeat first met Paul, he'd had enough. Despite having a good job, no companies seemed to trust him. He couldn't even get BT to install a landline in his house.

It was because he had a bad credit rating. That's the score that businesses look at when they're trying to decide whether or not to lend you money.

Debt counsellor Chris Tapp gave Paul an easy way to sort that problem out.

Normal credit cards wouldn't lend to him. But you can get higher interest ones, with APRs of about 30%.
If you're in debt and you're working to pay it off, your life doesn't have to be miserable in the meantime
Debt counsellor Chris Tapp

Chris told Paul to apply for one of them, and spend on it. As long as he paid the whole thing back every month, he wouldn't be stung by the interest rates.

It would boost his credit score, because lenders would see that he was managing his debts well.

Paul gave it a go, and it worked. Within six months, he'd been accepted for a cheaper credit card, and his credit rating had rocketed.

'Bide your time'

Despite that, he sometimes still gets turned down for credit.

Chris Tapp says that's to be expected right now: "In the current climate it's very difficult, even if you have got a pretty decent credit score, because the banks simply don't have the money.
Paul and Debt counsellor Chris Tapp
Debt counsellor Chris Tapp advised Paul to haggle more

"It might be a case of biding your time until the economic situation improves. That's going to be the case for a lot of people at the minute."

Paul's other problem was that he was in debt. But he's managing to whittle that down.

He says it's been surprisingly easy: "At the moment, I stand at about 7,000. I'm just trying to pay it off as much as I can. Just through being a little bit tight. I take a packed lunch to work."

Paul's started haggling for things too. One day he rang his phone company and gym and told them he wanted a better rate, or he would cancel his contract.

Both dropped their prices for him, and now he's about 100 a month better off.

But he says he still struggles to be good with money: "It doesn't help that I'm a pretty impulsive person, and temptation creeps in.

"Especially holidays. If anyone's going away, or something like that, I'm on it."

Chris reckons Paul shouldn't be too hard on himself though.

"It's not a complete disaster. If you're in debt and you're working to pay it off, your life doesn't have to be miserable in the meantime. It's good to have a bit of money for leisure," he says.

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