Poor Credit need consolidation loan

headcoat

I have either poor credit rating or have been told that I owe too much compared to my earnings. I owe approx 56% or my salary, I have been told companies would only loan 30%.

Having tried a few companies, this has made my rating worse. It looks like I can reduce my outgoings by about approx £150 a month if I consolidate, but no companies seem to look at it this way. Can anyone advise what I should do?

Phoenix79_2

Your bank should be the first port of call. How is your relationship with them? Do you run your account 'properly'? ie no unauthorised overdrafts etc.

56% isn't that much. I've borrowed near to 100% of my salary before at my bank (Natwest). I do consider myself to have a good credit record though.

What makes you think you have poor credit? Have you ever missed payments?

mountainofdebt

Can't think of a nice way of saying this but what is the problem?

Is it that your outgoings each month are too much?

If it is, then I have to be honest, consolidating has a big potential for making things worse as the lower payments can give you a false sense of wealth.

As you say, making several unsuccessful applcations have now made your rating worse.

Post all your details on the debt free wanabee board including details of your outgoings (with limits, balances, aprs) and income and the guys will have a good look at it to see where you can make those extra ££££s.

enjoyincubus

headcoat wrote:

I have either poor credit rating or have been told that I owe too much compared to my earnings. I owe approx 56% or my salary, I have been told companies would only loan 30%.

Having tried a few companies, this has made my rating worse. It looks like I can reduce my outgoings by about approx £150 a month if I consolidate, but no companies seem to look at it this way. Can anyone advise what I should do?

Unfortunately I strongly believe you have been misinformed. Whilst loan companies do take into consideration your total existing debts (excluding mortgage) compared to your income, there is no (sane) company that would limit this to just 30%!

Imagine you earned £30,000 per year, if you have £10,000 car finance then you are already over this 30% limit!

As a general rule of thumb once you start getting over 75-100% then it is time to start worrying, but it is not a reason to decline someone! Usually this is where an underwriter is needed.

The company you went to may have a matrix comparing the credit score and the maximum debt to salary ratio. For example, because you have a low credit score then they may only be willing to loan you up to 30% of your salary (including other debts). I do not know how common this is, but it does not happen with the company I work for.

Thinking about things, if a person is currently having payment difficulties and they have a debt to income ratio of 50%, then to start loaning them more money may be too risky on behalf of the loan company. If they have been paying things absolutely fine, then there is a lot less risk in stretching the customer a little bit more, as so far they have not showed any signs of having trouble meeting the current repayments. The worry for any financial institution (hopefully) is that by giving the applicant that extra loan it may be the final straw that breaks the camels back!

When consolidating existing debts the loans company should be taking into consideration the fact that the monthly repayments and debts are being reduced. Well that's my experiences of things anyway!

As Phoenix79 I would try your own bank first.