Questions re payment arrangements and credit file

jen_a_c

Hi,

Not got round to filling out a SoA yet but will do.

Was coping ok with debts but I've had a couple of 0% cards expire and I've been declined for three 0% cards and looks like I'm now stuck paying interest at 18% on one card and 22% on the other. The 22% card is with MBNA who wanted to put my rate up to 31% so I had to 'opt out'. On both of these cards the interest is more than the minimum payments and I'm struggling now with the repayments. I do have a couple of other loans as well which I was managing ok with until the payments on these cards went up. My credit file is good in that I have never missed payments, but I guess I just appear 'overborrowed'.

Anyway, there's the background, my question is - if I contact the cc companies and let them know that I'm really struggling with the payments, what can I expect? Will they ask for an income/expenditure from me? Can they deny to come to a payment arrangement and insist I continue with the original arrangements? Would they agree, for example, to reduce the interest rate and minimum payment? Or would they just freeze the interest? I'm not asking for the full balances to be written off, as I believe I should repay what I've borrowed and learn from it, but I just cant manage repayments at this level. I haven't missed anything yet but I've been using credit cards to supplement my income which has now had to stop as I've hit limits.

What effect would this have on my credit file? Accepting that it might affect chances of obtaining further credit, would it affect my partners credit file as well (none of the debt is joint)? would it affect credit scores for things like tenancy agreements and employment or do these just look for CCJs and bankruptcy etc?

Sorry this has been a little long and rambling but hope someone can answer.

Thanks

rayday2

If they are offering you huge interest rates or denying new cards I would say your history is already "damaged" or risky to businesses anyway.

It is really up to companies how they mark your history I am on a DMP for all my credit options, one company registered a default, although I think every company said they would give me one. Some are marked with arrangement to pays, some as arrears. My history is something like 524 which I am assured is better than 40-50% of the country (feel sorry for those worse than mine!).

I haven't applied for any credit other than a very high APR credit card to start to fix my history but I did get a remortgage last year with Chelsea building society. To be honest no one can answer the question you asked. The answer lies with you, are you struggling to live and do you need to offer lower payments?

jen_a_c

Thanks Rayday, yes I am struggling, and with minimum payments only the debts are growing. Can anyone else help re, the likely impact on my credit file of speaking to the companies and trying to arrange lower interest/payments? Anyone know of the type of search employers and landlords do, would it affect these, if this is the case there is no chance I can do this

immoral_angeluk

My credit file is good in that I have never missed payments, but I guess I just appear 'overborrowed'.

Also applying for 3 credit cards in a short space of time will have temporarily harmed your credit rating. Don't apply for any more or it'll just compound it.

if I contact the cc companies and let them know that I'm really struggling with the payments, what can I expect? Will they ask for an income/expenditure from me?

Yes, if you are asking to reduce the payments below the contractual amount.

Can they deny to come to a payment arrangement and insist I continue with the original arrangements?

Yes. In which case if you don't make the repayments they will hit you with fines etc

Would they agree, for example, to reduce the interest rate and minimum payment?

They could do yes. This is more likely if you go through a third party such as the CAB or the CCCS though. But in general if they agree to accept reduced payments and freeze interest they will do it on a temporary basis, usually 6 months until they reassess it.

Or would they just freeze the interest?

They could do whatever they like. They could only freeze the interest, they could freeze the interest and accept reduced payment, or they could accept reduced payments but not freeze the interest. You also need to ask for no further charges to be put on the account.

I'm not asking for the full balances to be written off, as I believe I should repay what I've borrowed and learn from it, but I just cant manage repayments at this level. I haven't missed anything yet but I've been using credit cards to supplement my income which has now had to stop as I've hit limits.

You need to put together a full financial statement and work out what you CAN afford. As just making the repayments doesn't neccesarily mean you can afford it realistically. Then once you've done that, work out offers to them pro rata based on what you can afford to repay, asking for charges and interest to be frozen.

What effect would this have on my credit file? Accepting that it might affect chances of obtaining further credit,

Any payment arrangements stay on file for 6 years, along side any defaults or CCJS etc.

would it affect my partners credit file as well (none of the debt is joint)?

Not unless you have a financial link to her, joint bank accounts etc. If you don't, then no, it won't. IF you do then yes. It will.

would it affect credit scores for things like tenancy agreements and employment or do these just look for CCJs and bankruptcy etc?

Depends who your landlord is really and how tough their credit scoring assessment is. If it's a registered social landlord like the council or a housing association then it's unlikely it will affect it at all, whereas if it's a private landlord or an estate agent it will probably mean you have to provide a higher deposit or something like that.