How much is too much credit??

headstuckinsand

FavDaughter1 wrote: »

i felt terrible when looking at the debt and at what we could afford,it upset me,but it's the way it is,you pay back what you can afford. it does make me question why it's possible for people like us to lend/get so much credit. circumstances changed for my hubby,a drop in income which didn't help at all but i still think even if that hadn't happened he was still getting too much credit.

It's a very good point made, but as most card companies work off your credit rating - providing you keep up your monthly payments - then the card companies will keep throwing money at you. I remember when I first got my Capital One card it had a limit of £3k - by the time I went into the IVA they'd raised this to nearly £15k.

Before I entered into my IVA, my credit rating was excellent. I'd had no defaults or missed payments, I even had about £20k in unused available credit. In fact, when I went to set-up a cashminder account at co-op the manager looked at me funny as if to say "why do you want one of these - they're only for people with credit problems?"

In theory, I could have kept going for another 6-12 months before I finally went pop but at the end of the day it's all about personal choice. I chose to stop ignoring the problem and hit it head on and the IVA was the best way to do that.

In my opinion, the whole credit scoring system needs overhauling so that you are required to do something like an I&E whenever you apply for a new card/loan/overdraft etc based on payments on the maximum amount that's being applied for.

If we had to prove that we could support the extra debt then we might not be so keen to take it up.

Just my opinion - wanted to open this up for discussion to hear anyone elses comments.

the_bright_side

I am / was exactly the same, but I knew it was unsustainable, needed to be responsible and to be honest I just didn’t want to keep paying interest and dealing with CC companies for the rest of my life, I want an end to this feeling of owing / burden / responsibility to work for once and for all.

Foxy-Stoat_3

The excel spread sheet is your friend !

I put all 8 of my CC's on a simply spreadsheet with balance less monthly payments @ £X + interest rate = remaining balance. Copied it month to month until the balance was zero. Was shocked at the length of time it would take someone to repay all the debt and even more shocked at the total interest I would of spent if I had paid them all off.

If it takes more than 5 years to clear your not paying enough off each month, you should be aiming for 3 years. If you cant afford to pay it off within 5 years then its too much credit or interest!

If you can only pay the minimums each month then you really cant afford to keep paying indefinatly and should be reaching for alternative ways of paying them off.

the_bright_side

Foxy-Stoat wrote: »

If you can only pay the minimums each month then you really cant afford to keep paying indefinatly and should be reaching for alternative ways of paying them off.

Thats the exact reason I'm entering into an IVA

Foxy-Stoat_3

They should teach this stuff at school!

Bustrbroke02

the issue here is that some people are vulnerable to credit and i am a great example of that. My business was hit by the credit crunch and i ran out of money, at this stage i thought that i could regenerate my business with a bit of help from the bank, so I took on a 10k overdraft which they gave me without any questions at all, not even a credit check. I was then offered £9k by MBNA with a business credit card. When you get desperate and cant pay the mortgage or buy your shopping or feed the kids then you take what is available, mand so on and so on and then I end up in an IVA. Sure we all have to be responsible, but IMO credit card and loan companies do not treat customers fiarly by giving them credit that they can not afford.

FoggyBrain_2

This is true, Bustrbroke02. However, a large part of my downfall was when MBNA doubled the interest rates. Before that I was managing to pay the monthly interest AND bite into the balance, however, afterwards I was only just making the interest and the balance was increasing slightly every month !!

katiemay_2

FoggyBrain wrote: »

This is true, Bustrbroke02. However, a large part of my downfall was when MBNA doubled the interest rates. Before that I was managing to pay the monthly interest AND bite into the balance, however, afterwards I was only just making the interest and the balance was increasing slightly every month !!

It is so unfair that companies are allowed to just double the interest rate - I mean, what do they think is gonna be the result???

debtinfo

you dont have to accept the rise, you can say no, this just means that you wont be able to use that card again.


as far as the general discussion, remember the banks have different goals to you, you look from an indvdual point they look at the majority of people. It doesent matter how much credit you have or how much they lose inyour IVA/Bankruptcy as long as they make a profit over the whole lending business, if they raise the interest rate or increase your limit, they may lose on you but thousands of other people pay them a little bit extra which gives them a larger profit