Looking for a little advice!

EagleGreen

Hello folks,

I am new to this forum although I have been using the website for some time. I am looking for a little advice.

I currently have a high level of Credit card debt which, whilst bothering me, is not really proving to be an issue at the moment since I earn a pretty good salary and can make the monthly repayments. However, I have my wedding coming up and being the way I am, I decided that I wanted to wipe this debt out with a personal loan. I have one other loan at the moment which I have had for 3 years and have 2 years left to pay.

My CC debt is mostly on low interest rates (I have Amex B.A. card (4.8%) and Halifax One (0% until Feb 07) and currently I am repaying around £600 across them) Reading Martin's advice, I applied for a loan having purchased my credit rating from Equifax. My rating is "excellent" on their scale. I also decided to get my score from Zopa, which came back at 493 points, again "excellent"

My problem is that Northern Rock have refused my application. I have changed both credit cards in the past 6 months and my partner did take out a loan in this time frame too, would this have affected Northern Rock's decision? I am confused as to why I was rejected given that my profile looks great??

Can anyone give me any advice as to why?

Annie_Fanny

EagleGreen - hmmm where to start? Don't take any of this personally - I am just throwing out some thoughts/suggestions.

Your comment 'I decided that I wanted to wipe this debt out with a personal loan'. Getting another form of debt will certainly not wipe your cc's out - they will still be there but just in another form. I think there needs to be some re-education here on money/budgeting/finance - the whole lot!

A few questions - when are you getting married?

Oops will be back later to finish this post!

Ta

Annie

Kevicho

I think this is a blessing in disguise

i think you need to concentrate your efforts paying off the debt rather than transferring it.

Do you know about the snowballing technique of paying off credit cards?

Chortle_2

If your credit cards are 4.8% & 0%, you'll automatically pay more interest if you took out a loan to consolidate - unless you manage to get a VERY good deal anyway

Am I right in assuming that you want to clear the CC's in order to put the wedding expenses on them?

Either way, I'd agree with Kevicho, in that being rejected is a blessing in disguise. Do you really want to have 2 loans, and 2 credit cards?

If you're rating is 'excellent' (and bear in mind here that lenders never go by experian scores etc, they take the info from the credit reference agencies, and then work out a score for themselves using their own formula/criteria) then its probably something to do with your level of available credit/current debt to your earnings

Kevicho

Lenders lend a percentage according to you income, so usually people if they run up the maximum debt and both use the same percentage of their incomes they will usually clear the debts in the same time (maybe slightly longer in the person who has more debts case as they are paying more interest)

EagleGreen

Thanks for the responses!

Perhaps a flippant comment to say "wipe it out" - what I actually meant was to give myself a plan to actually clear the amounts on the cards at the moment. As it is, I can never see any of the figures redcuing .. I just keep making payments, then adding to the cards. With the loan, at least I would be clear in three years.

Kevicho - snowballing?? No .. ?

Chortle - I appreciate that I would be paying lower interest in the short term, but my overall desire is to have a fixed horizon when it will all be paid off. I would close the CC's I have just now once cleared with the loan, and know that in 3 years I have no more CC.

CLAPTON

if you are earning a 'good salary' and presumably your OH is earning, you should be looking to pay off your debts and start to build up savings for the future.
presumably the wedding will be funded by more debt?
you need to review your spending to understand why you are spending more than you earn. what will happen in the future if you want to start a family and maybe lose one income?
as others have said, gettting a loan is not paying off debts but building a great big hole to add even more debt.

i would suggest you post a Statement Of Affairs here and people will be able to help you reduce spending and so start to reduce these debts.

read this thread for details of SoA

http://forums.moneysavingexpert.com/showthread.html?t=107280

moongarden

scissors? you could always cut up the cards to stop putting new things on them. its hard but as long as you have that little bit of plastic in your purse you will keep spending.

also what if:
you search round and find a good loan rate, take out a loan, clear the credit cards.
then you decide you want to buy something - even something small - so you use the credit cards again.
gradually over a few months you build the credit card balance back up.
then you have the loan AND credit cards

this is a real problem for many of the people here who tried to consolidate their debts and have a fixed point on the horizon when they will be free

but what they forget is that until they re-educate themselves (i.e. have their real lightbulb moment) on the good way to use a credit card they will allow themselves to keep frittering money away.

EagleGreen

MoonGarden .. my intent IS to cut up the cards! I appreciate the sentiments exressed, but my intent is to get rid.

Molanole

Here's the link to the snowball calculator.

http://www.whatsthecost.com/snowball.aspx

I have found this to be one of the most crucial elements of my debt free planning.

Good luck!

southernscouser

EagleGreen wrote:

As it is, I can never see any of the figures redcuing .. I just keep making payments, then adding to the cards.

The problem lies right here fella! You are clearly living beyond your means.

By getting a loan all you will end up doing is racking up the CC's again! Been there, done that, got the t-shirt. Several t-shirts infact! :doh: :rotfl:

I know I'm teaching you how to suck eggs here but the maths is simple. If your outgoings exceed your incomings you will go further into debt! You need to address your spending to be honest.

Have a look at this thread for a guide on a SOA and post back here with it!