Poor Credit Rating: Loan or Payment Plan

lihar

Hi

Was wondering if I can get some advice, Ive been overloaded with information on the web and I don't want to do something silly.

Currently I have :

£2800 - credit card, 19% apr nationwide
£2850 - credit card 25% apr capital one, both limits are £3000 each
£1200 overdraft ( i am currently paying off £50 a month on this)

My minimum payments average (for credit cards) about £170-190 a month. I am in a position to pay off maybe 100-150 extra a month in total.

I have hardly applied for any credit, just have all this. Credit Expert score in the 600's and POOR. I called them and they looked through and said literally the only thing making it poor is that im using something like 93% of my available debt which to other lendors, when applying, makes me look desperate for cash. catch 22 though because i have a poor rating and cant move anyhting to a 0%. he says when i have like 75% use of debt per card i may get a transfer.

So i looked at loans and now obv im being bombarded with calls and smooth debt and debt fixers all trying to sell me a payment plan but im reluctant because i think they are bad news. i want best for my future, my credit report and my life. I am willing to cut back hence why ive squeezed the extra 100 a month to make overpayments. but please can someone let me know, is this slow plan the best or shuld i go for a payment plan or aproach my bank for a loan or what???

please help!

Tixy

You don't want a payment plan from any of these firms calling you. You are currently able to pay more than your minimum payments and payment plans / debt management plans are for people who cannot pay the minimum payments.

Who did you approach for a loan? Who do you bank with?
If your own bank won't give you a loan then instead I would suggest you look at the snowball calculator at focus on repaying any extra payments at the debt charging the highest interest. The snowball will also show how long it will take to repay your debts if you keep them with these providers. http://www.whatsthecost.co.uk/snowball.aspx

lihar

i bank with natwest and the loan search was via experian. many many calls have ensued, none i am now picking up. too much.

so you think a loan from my bank is the next best option to just making overpayments to the credit cards??

thanks so much for this so far. i was very close to signing up with smooth debt plan

Tixy

Even if you did want/need a debt managment plan (which I don't think you do) only ever use a charity who will run it for free for you. Commercial companies will typically charge you 2-3 months payments as upfront fees and then a percentage fee of all furture payments. And they often seem to forget to explain the huge impact on your credit score of enterting a debt management plan.

Most people on here are not fans of consolidation loans. Often people take out such a loan and then run up their cards again, or don't actually address the overspend issues they have. There are lots of people who have consolidated once or twice and still run up the extra debts again before they really started to tackle their debts and start reducing how much they owe.

That said consolidation loans can obviously work out cheaper for some people depending on the APR you might be able to get.
So you could try your own bank for a consolidation loan if you felt that would be useful to you and felt sure you wouldn't run up any more debts and felt your income was secure enough that you would be able to meet the monthly payments for the durations of the loan.
Or you could stick with the debts as they are and use the snowball to help you structure your repayments.

If your own bank won't loan then other banks are not likely to either (well except subprime lenders charging huge APRs). Anyone who is approaching you (rather than the other way round) is someone to steer well clear of.

lihar

thank you so much. invaluable. I will throw every spare penny i have at my debts. oh and i should therefore not try to reduce the limit as i am paying more off the credit cards, right? I can trust myself not to spend on them, so its more that from a credit scoring i need to leave the limits as they are and throw money left right and centre at my debts.


i am going to DO this!