Killed credit rating in attempt to mange debt - help!

serbask

Hi, this may be an easy one, but as I am too close to it I cant get my head round the best way to handle my debt. The problem is that I have been manageing my debts really well (or so I thought) by moving them to 0% interest cards, changing bank accounts etc, and in the proces I have wrecked my credit rating.

To summerise:
Debts - £2,123 on Virgin CC 0% interest to end October (currently paying minimum payment of £25pm), £300 on abbey Zero 0% until may (paying £100pm to clear before 0% ends), £1500 OD with A&L 0% until January 2010 and I owe my 2 year old daughter £900 (which really pains me).

I bought my new house a year ago (strike one for credit score), I took out both my Virgin and abby cards in the past 12 months (strikes 2 and 3), I took out the A&L current account 2 months ago (strike 4), and I paid my Virgin card on the 7Th one month which apparently is too early so have a recent non payment (strike 5).

I will pay the Abby zero card off in 3 months (then will cancel it), but I've got no chance of paying the Virgin CC and OD by the time the 0% runs out. Do I apply for a new 0% card when deals run out, further wrecking my score (which according to Martin's tool is very weak), get a loan to pay everything off, or take a hit with the interest?

My car is also on its last legs so an going to need to find money from somewhere for a new car too! Any suggestions would be greatly appreciated.

hypno06

Ok, first of all, find out what your credit file says - you can sign up to creditexpert through quidco, and get cashback for doing so, as well as getting a 30 day free trial.

So, you can check your file to see what late payments and searches etc have been done against you. This is a good starting point.

Cancel before your 30 days is up otherwise you will pay £6.99 a month (I do this, because I check my file frequently to ensure I have no errors against me, but most don't, so you choose....).

When you check your file, you can check your actual Experian "score" for an additional £6 or something - if you are worried about your score, it might be worth doing this to see where you are.

If you don't apply for credit for 6 months, this has a really big positive impact on your score, so if it is only a few months since you last applied for something, give it a break for a bit before applying for anything else.

serbask

Unfortunately I did the experian free trial just to get the £6 about 18 months ago when I had no debt!!

I pretty much know what searches there have been, working backwards:
Last week - Vigrin CC when asked for increase
2 weeks ago - when 1st asked VCC for increase
Jan 2009 - Applied for A&L Current Account
Dec 2008 - Apllied for Abbey CC
June 2008 - Apllied for VCC
March 2008 - applied for mortgage

Im not sure what else you get searched for - I do the usualy comparison sites for house and car insurance in March and July. too

grastgirl

serbask wrote: »

To summerise:
Debts - £2,123 on Virgin CC 0% interest to end October (currently paying minimum payment of £25pm), £300 on abbey Zero 0% until may (paying £100pm to clear before 0% ends), £1500 OD with A&L 0% until January 2010 and I owe my 2 year old daughter £900 (which really pains me).

I think we could do with the limits and knowing what your current payments are to help more, but once you've paid off the abbey card the £100pm could go on the virgin card, which would remove an extra £500 before the 0% finishes. The other thing you could do is make sure your payment stays the same as you pay it back rather than them reducing it as you pay off some of the capital, afterall if you managed one month with that amount going out, you can presumably manage with that amount going out for the remaining months. The snowball calculator may be able to help, although I'm not sure how it deals with 0%'s running out.

Maybe you could ask Virgin to remove the non-payment, seeing as it was paid, but you got ahead of yourself, seems a bit harsh to be honest, probably only necessary if you need more credit. Perhaps it's best not to cancel the Abbey card just yet in case you need to spend on it for the car (and the car only) so you don't need to have any more credit checks on your file just now. I think they also do searches for contract phones and gas/electricity by direct debit, although I'm not sure.

Your daughter is too young to know or care that she is owed money, so don't worry about that just at the moment.

In terms of the overdraft, any improvement in that should probably come from reducing your monthly outgoings in other areas, like food, entertainment etc. If you post an SOA you might get more help.

Keep your chin up.

serbask

Virgin CC - pay £25 pm - balance £2128 - limit £2500
Abby CC - pay £100 pm - balance £300 - limit £5000
OD - balance current £1300 - limit £1500

I can afford the £125 that goes out at the moment, so can pay all of that towards VCC once abbey is paid. In Oct the balance of VCC should be £1600 if I do this.

I am a serious money watcher - I have a spread sheet of everything that comes in and out and have got in a good habbit of not spending on anything that isnt necessary. Got a great phone deal that cant be bettered, have switched gas and elec 3 times in last year (3 more searches???), got home and contents with accidental damage for £50 ... you get the point!!! So not much chance of increase OD by that method. I.m an avid seller too, and sell virtually i dont need on ebay, car boots etc.

I called Virgin asap when I saw the charge, they refunded half of the fee and reinstated my 0% deal - which was good but I think the non-payment still stands.

The other thing I just remembered is that I have an empty Halifax card with a £5K limit - whilst I know that having this amount of credit available is really bad for credit rating, but I kept is open as an option for hagglig a btter deal come October i.e. get a better deal from an existing card rather than another search on a new card. the Abbey zero has a really high rate once the 0% finishes.

serbask

SOA below - I pay for all moy insurances, ground reant etc in a lump sums so i have a bit more to play with than it looks. Have already just had all house related costs (inc insurance, ground rent), and got 12 months MOT. Car insurance due July otherwise got no big things to go out.

Now I know that the smart people out there are going to suggest that horses are a luxury item and that ditching them would be the obviously way to go, but one is 28 and I have had her 18years, the other is 19 and I have had him for 10 years. They are both part of the family and a way of life that I could not do without. I have cut all posible costs when it comes to them - so whilst it defies the laws of money saving and debt free wannbe - please don't make suggestions in this area!!! I offset this cost be not having a man to support!!!

Statement of Affairs and Personal Balance Sheet[/b]
Household Information
Number of adults in household........... 1
Number of children in household......... 1
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 838
Partners monthly income after tax....... 0
Benefits................................ 530
Other income............................ 0
Total monthly income.................... 1368
Monthly Expense Details
Mortgage................................ 470
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 13
Council tax............................. 56
Electricity............................. 16
Gas..................................... 16
Oil..................................... 0
Water rates............................. 12
Telephone (land line)................... 0
Mobile phone............................ 15
TV Licence.............................. 12
Satellite/Cable TV...................... 4
Internet Services....................... 0
Groceries etc. ......................... 120
Clothing................................ 0
Petrol/diesel........................... 100
Road tax................................ 10
Car Insurance........................... 20
Car maintenance (including MOT)......... 5
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 3
Contents insurance...................... 3
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
2xHorses................................ 320
Total monthly expenses.................. 1205

Assets
Cash.................................... 0
House value (Gross)..................... 95000
Shares and bonds........................ 0
Car(s).................................. 800
Other assets............................ 3000
Total Assets............................ 98800

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 85000....(470)......4.74
Total secured & HP debts...... 85000.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Virgin CC......................2128......25........0
Abby Zero......................300.......100.......0
Over Draft.....................1500......0.........0
Total unsecured debts..........3928......125.......-

Monthly Budget Summary
Total monthly income.................... 1,368
Expenses (including HP & secured debts). 1,205
Available for debt repayments........... 163
Monthly UNsecured debt repayments....... 125
Amount left after debt repayments....... 38
Personal Balance Sheet Summary
Total assets (things you own)........... 98,800
Total HP & Secured debt................. -85,000
Total Unsecured debt.................... -3,928
Net Assets.............................. 9,872
]