REFUSED CREDIT ... Next step to re-mortgage??

DJP_2

I'll try to keep this brief , 1 year ago i had an excellent credit score of 962 (obtained from https://www.creditexpert.co.uk) , since then i've been self employed which started off promising then turned into a financial nightmare.

I'm now an employee again , but in the mean time have racked up 2 loans (£5k each) , 3 credit cards (£7k between them) , which i'm not exactly proud of but anyway.

Just recentley been refused credit at a furniture store which i have not experienced before. I'm assuming its because theres too much expenditure going out the house on credit and not enough coming in (which is £25k) .

We have a mortgage of £82,000 also , so my query is do we attempt to re-mortgage and consolidate all my other debts seeing as i've just been refused credit , or if we do attempt and get no success , any ideas where to turn to next ??

Many thanks in advance for any helpful replies.

southernscouser

Hi DJP, welcome to MSE.

OK, you say you have been refused credit. Have you missed any of your payments on your debts?

If you list all your debts with company name, ammount outstanding, length of term and whats remaining on your loans, credit limits on you cards, and APR's (very important they are exact)and what your currently paying we can get a better picture of your situation.

Also post all your monthly incomings and all your outgoings so we can see where you can cut back.

Now I'm no expert in the mortgage department but what I have picked up from this site is that it's generally not a good idea to secure the debts to your home as you risk it being repossesed! However, someone with more know will be able to advise you better.

DJP_2

Hi there Southernscouser thanks for quick reply.

Ok , i've never missed any payments completley , although been slightly late on a small amount of times.

CREDIT CARDS

Lloyds Tsb : credit limit £6000 - amount outstanding = £2000
(monthly rate 1.204% purchases and 1.496% cash)

Egg : credit limit £3500 - amount outstanding = £3000
(0% due to run out , not sure to what)

Barclaycard : credit limit £5600 - amount outstanding = £2200
(14.5% APR purchases and 12.2% APR cash)

LOANS

Northern Rock : outstanding amount = £4600 .. 4yrs remaining APR 5.8%

Intelligent Finance : outstanding amount = £5200 .. 7yrs remaining APR 13.9%

Hope this is readable and understandable.

Many thanks in advance.

southernscouser

OK, can you also list all your incomings and outgoings so we can see what you have to throw at your debts.

Now your debt is £17,000 but potentially with available credit to you it could be nearly £25,000. This could be one possible reason you were denied credit.

The APR's are quite high so my advice would be to either apply for another 0% card OR a low APR life of balance card. I wouldn't apply for both as it may look to possible lenders as though your desperate. If accepted transfer what you can from the card with the highest APR. If you manage to transfer all of a balance, go to the now £0 balance card and ask them if they can offer you a special rate for balance transfers. For example a low life of balance APR. If they offer you a good one (ie cheaper than what your paying on your next highest card) transfer as much as you can on to that. If they reject, ask to cancel the card. They might then offer you something, even if they don't still cancel.

By doing this you are getting all your debt on lower APR's and therefore cheaper interest and when cancelling cards with a £0 balance you are making yourself more attractive to lenders.

Repeat this process until you have done all the credit card companies.

HOWEVER!

Avoid paying a fee for transferring balances! Come back and let us know what they say. Also try and avoid transferring to a card with an outstanding balance as you will be paying the old rate first on that.

Hope this all makes sense. Someone else might be along to totally contradict me but it makes sense to get your debts on the cheapest interest possible.

Try http://www.moneysupermarket.com/cards/credit_card.asp for the best deals on cards or the credit card forum.

southernscouser

Also meant to say that if the credit card companies don't offer you any special rates ask to reduce the credit limits to say £500 above the outstanding balance.

If they offer you something and your not sure take all the details and post on your thread and we'll give our opinion on what to do.

Good luck.

Xbigman

As no one else has said it. From the first post it looks like you are thinking that running up debts and then remortgaging is a natural progresion, which it isn't. I know you have reasons for going into debt but I become concerned for the poster every time I read this sort of thing. It is so easy to remortgage or consolidate and not address the basic overspending problem. A problem now made worse in the long term as interest is payable long term.

I don't think you have this problem yet. It looks like you have seen the refusal of credit you have had as a wake up call that something is wrong and you want to address it. But please be aware that you are far better off not thinking in terms of any more borrowing for any reason.
If you now have a good job that pays more than you need to live then the way forward is to cut back on spending as much as possible and throw all your spare cash at your highest APR debt. This is a strategy that the vast majority of people who post on this board support and for you it is undoubtedly the way forward.
Regards



X

*Sparkle*_3

Sorry to be on a downer's... but why are you applying for credit when you have so much debt already.
I have also thought about getting a secured loan to consoldidate my debts(15k), but i realised that this is not the answer, once i clear that debt "with one easy monthly payment" then i will end up running the credit cards again.
Do you really need the credit that you was applying for in the furniture store??
i have just recently realised that i have got to stop, stop spending!!

Best wishes