Good credit record but can't get a loan

thebigM

Hello everyone,

I would be really grateful for any advice as I am tearing what is left of my hair out!
My problem is this: despite a good credit score (964 with Experian and 476 with Equifax) which are rated excellent and good apparently, I can't seem to get any credit.
Due to various changes (redundancy, becoming self-employed, getting married, having a child, wife giving up work, taking on some of her debt, etc.) I am in a situation where I have about 22 K of debt on credit cards. I know this is not good and I am currently just making the minimum payments, which is why I want to loan to clear a couple of the cards (around 5-7 K).
I understand this level of unsecured debt is not helping my application, but I am obvioulsy borrowing to reduce this debt.
Has anyone else been in a similar situation or can anyone recommend a bank/lender who might be suitable for my situation. I have checked out the lenders who use only Equifax, so should I just try and approach them?
I would really appreciate any help.

Tixy

The credit score only reflect that there is nothing negative on your credit file (so no defaults or CCJs presumably), it doesn't take into account many other factors, not least your income compared to existing debts, your perceived stability regarding your address/job etc, whether you use an overdraft every month, whether you are just making minimum payments etc.

Any potential lenders will look at what you already owe, what you could still spend (unused credit) and at the new loan you want and see if they think you could service all that debt on your salary. If you are only making minimum payments then presumably you couldn't afford to service an extra £7k loan.

The lenders won't take into account that you want to consolidate because they can't make you use the money for that purpose or couldn't stop you running the cards up again.

If you already owe a lot compared to your salary consolidation might well not be an option. Do your APRs vary a lot across your cards? could you save interest by shuffling some of the debt around? might be worth posting up your card providers, balances, limits, and APRs to see what anyone can suggest.

Or you might want to post on the debt free wannabe board and post up your statement of affairs to see if people could suggest areas you could save money/get things cheaper etc so you can pay more to your existing debts and start to clear them quicker.

nomoneytoday

The scores don't mean a huge amount as the agencies aren't lending you the money, the bank is.
Their "score" will reflect the affordability of taking on the new debt, and showing a potential balance of £29k (22 + the new 7), possibly with your wife and child as household expenses too.

Unless you have a high enough salary to match the £29k I doubt the odds on a prime rate loan being 964/1000

DarnIt_3

You can be fantastic at handling credit...but if you have used all your spare credit in comparision to your income then you wouldn't be able to get credit elsewhere.
You will have to clear some of the debts first.
Alternatively you wife can get a card and you could transfer debt over to her card if its on a better APR?

CLAPTON

how much do you earn

what are the details of the debts, amounts, apr, minimum monthly payments

thebigM

Ok, thanks for your help. I am self-employed and earn on average 2,300-2,400 a month before tax plus another 475 a month from renting out a flat which covers the mortgage I have on it. So, as you say, my debt to related to what I earn is high and I don't have much available credit on my card. It's frustrating because if I could pay one of them off, I could transfer debt from another card onto it. The wife is going to have to go to work...

thebigM

I earn about 27 K a year plus 5,700 received from rent

Debts:
egg card - 5,500 credit limit 6,200 - min montly payment £130

Mint card - 3,900 credit limt 4,300 - min montly payment £91

MBNA card - 5,800 credit limit 6,000 - min montly payment £170

MBNA card 2 - 8,088 credit limit 8,300 - min monthly payment £250

I live rent and mortgage free and pay £225 council tax a year.

DarnIt_3

Have you been self employed for long? That may have some impact. But 22k in comparison to 27k income is a high ratio of debt to have. The fact that you are using most of your available credit is also going against you.

You are going to have clear some debts first by the look of it. Good Luck

Tixy

Have you looked at the snowball calc at all? - http://www.whatsthecost.com/snowball.aspx
Its quite a useful tool to see how much difference you can make in the overall interest cost by just paying a bit more than the minimum payments and how much quicker you can be debt free.
If you find out all the APRs and put the info above into the calculator you can compare how much difference you could make by paying say £700 a month rather than the current £640.

CLAPTON

the first step is to look at your income and spending; if you're living rent/mortgage free then repayments of 600 per month against income of 27k should be do-able

try http://www.makesenseofcards.com/soacalc.html

and of course try the snowball calculator as suggested by Tixy

thebigM

Thank you all for your help