should i ask for credit limit reducing

andrea1968_2

Hi I'm a first time poster.

I've got £6200 spread over 4 credit cards and I'm wanting to get a personal loan to cover the whole amount.
All 4 cards have got quite a high credit limit on them as I've already managed to pay back almost £9000:) .
Am i better off getting the existing cards to reduce my credit limit - would that look more favourable than having loads of available credit or does it look better if the % of debt isn't that much of the available balance ?

Thanks

chattychappy

This is a dark art because nobody really knows.

But I suppose if your existing credit limits + the loan you're applying for is less than half your income, then you don't need to worry.

If it is, then I'd reduce your limits such that the total is below your half your income, or as close as possible, but without leaving yourself no buffer on your credit cards (say 20% above your current usage - also you don't look desperate that way).

Remember that whatever you do that credit reference agencies can take a while to update their records - as long as 7 weeks in my case with Experian.

Any reason why you're not considering going for a 0% BT type card? The 3% (or whatever) BT fee could work out a lot less than what you'd pay on a personal loan.

BLT_2

I'm not an expert on this issue but my understanding was that in some cases asking to reduce your limits can be seen as indicative of money troubles by some firms, although as chattychappy says it is a dark art and no one knows why a guy with a totally crap credit record will get offered a CC, whilst others with a perfect one will get refused.

andrea1968_2

Thanks for that. I really want to reduce the amount I'm paying each month - about £900 at the moment (minimum payments are only about £350) to get the debt reduced- as I said I've already paid off a massive amount but a loan would be aound £280 over 3 years.

BLT_2

andrea1968 wrote: »

Thanks for that. I really want to reduce the amount I'm paying each month - about £900 at the moment (minimum payments are only about £350) to get the debt reduced- as I said I've already paid off a massive amount but a loan would be aound £280 over 3 years.

And therein lies the nub of the problem. Currently you are paying 900 pounds per month to clear a 6000 pound bill, so in essence 6 to 7 months.

By locking yourself into a 280 pound per month bill for the next 36 months you will pay back 10800, (incidentally that is a very high interest rate, if you do decide to go for that option you are better off looking for 7500+. at which point the rate drops dramatically). However you based upon your original loan aspirations you are increasing your total debt by 5,000 pounds, almost double what you owe currently, more importantly you can not overpay on a personal loan so you have committed your future income for an extended period.

In a worse case scenario if you feel you are not getting enough of your wages for yourself reduce your monthly payment by a few hundred pounds, you will still be paying off your debt but getting enough money to enjoy yourself as well.

andrea1968_2

thanks thats really good advice. I suppose if I knuckle down for the next few months it'll be worth it. Just seems like I've never got any money spare

BLT_2

andrea1968 wrote: »

thanks thats really good advice. I suppose if I knuckle down for the next few months it'll be worth it. Just seems like I've never got any money spare

An issue which will no doubt feel even worse when the sun kicks in and you want to be out and about.

However every time you feel like taking out that loan and reducing your outgoings look at the way your signature block would look on this forum, that should be motivation enough

Andrea
Debt Apr 2010 6,000 Debt May 2010 10800

Debt Free Date 2013

andrea1968_2

Nice one - its a no brainer when you put it like that!!!

CannyJock

andrea1968 wrote: »

Hi I'm a first time poster.

I've got £6200 spread over 4 credit cards and I'm wanting to get a personal loan to cover the whole amount.
All 4 cards have got quite a high credit limit on them as I've already managed to pay back almost £9000:) .
Am i better off getting the existing cards to reduce my credit limit - would that look more favourable than having loads of available credit or does it look better if the % of debt isn't that much of the available balance ?

Thanks

What're the cards, their balances, APRs and limits? Any of the existing cards able to offer you a balance transfer or low LOB deal? If you're paying £900 per month, hopefully you're snowballing the payment?

Your best bet is to work out a way to minimise ongoing interest - a good shuffle could help you there.