Credit Referencing - ARGGHHH!

MrGrinch

Hi Everyone,

I have a seriously frustrating situation on my hands;

I currently have about £6,200 of un-secured debt, and as this forum accurately describes, I want to be free of this debt asap.

I have looked into obtaining a loan to consolidate these debts into one monthly repayment and have some closure, and not to mention reduce the interest charged. I could easily keep up the repayments on an 18 month term for a loan of this value, but when it comes to my credit report I get declined at every opportunity.

I recently looked at my report on equifax and also obtained my credit score. 298 is my score, shocking! Reason for this probably being that one of my credit cards is under an 'arrangement to pay' (which is strange because my other credit card was on something similar yet never appeared on my report), I also only recently registered for the electoral roll so this probably isn't showing on there yet, and I had arrears with the other credit card which I settled and brought up to date last month (also probably not appearing yet).

I have a decent income from full-time employment and am part of a shared ownership scheme with my apartment, technically saying that I am a part-homeowner. Every bank I have spoken to have said that my income and expenditure is more that suitable for a loan, it is simply the credit report which is stopping me. I hate credit referencing, I mean in most circumstances I can agree with its purpose, but when it comes to someone who wants to clear debt with a loan it is ridiculous, because the loan will settle all debts shown on the credit report, so effectively it is useless as a reference. A loan will help the situation, therefore all these banks that say we need referencing to make sure you'll keep up repayments, YOU'VE SEEN MY INCOME AND EXPENDITURE, IS THAT NOT ENOUGH EVIDENCE?!

Argh!! Seriously frustates me, not that you can tell! lol

Well I was wondering if there was anyone out there who knows of a solution, or of a way to improve my credit report? Any help or guidance would be so greatly appreciated.

Apologies for the essay!

Many thanks,

Grinch

DizzyDizzy

Have any of your creditors registered a default? If your credit reference is poor at the moment, your best option might be to start a DMP, this will mean your credit rating will remain poor for the next 6 years as your creditors will register a default, however if you have a decent income you can probably clear all the debt on your DMP within that time and then start building your credit rating back up again?

Bored

Have you considered snowballing your debts rather than consolidation?

topcat9

Hi MrGrinch,

Amongst the reasons why you are unlikely to get a loan:

1) You have a poor credit record which indicates you are already struggling to pay your debts (evidenced by the arrangement to pay and recent arrears).
2) Although you plan to replace existing debt with a loan, from the lenders' point of view you will be adding yet more debt to debt you are already struggling to replay. So you can't really blame them for turning you down.
3) What usually happens when people do manage to consolidate their debts is that they don't cut up the credit cards that got them into the problem in the first place and end up with even more debt!

Don't be offended by my comments - I only know all this because I have been in exactly the position you are in now, as have hundreds (thousands?) of others on this site. In fact worse, because I got to point 3 and increased my debt further! The best thing to do is post an SOA (statement of affairs - see sticky at top of the forum page). This will show you all your income and outgoings and allow others to give you tips on how to improve your situation. You might find that by making some smart savings you can easily keep up with your current payments and get your credit report back in order, or it might tell you that you need to take more drastic action such as the DMP suggested by DizzyDizzy.

All the best and keep posting.

MrGrinch

Many thanks for your swift replies!

I understand what you are saying about the lenders seeing a loan as further debt, but just to clarify I haven't used the cards for almost a year now, and have since cut them up anyway to avoid making the situation worse.

Here is a breakdown of my current debts, just so that you have a better understanding:

Lloyds TSB Overdraft #1: £1,500
Lloyds TSB Overdraft #2: £1,500
MBNA Credit Card (Virgin Money): £1,770
Halifax Credit Card: £1,500 approx.
Payday UK Payday Loan: £625
Wonga Payday Loan: £105

TOTAL: £7,000

(I forgot to include the payday loans in my previous post)

I registered with PayPlan over a year ago and this is where the DMP appeared on my credit report, but PayPlan actually made the payments to Halifax late a couple of times which generated the arrears. I left PayPlan because of this, but still kept the arrangement going with MBNA (although never advised of the affect on my report) which means I incur no interest on their Credit Card.

I was never advised by PayPlan or the creditors that a DMP would appear on my credit report, which is the most frustrating part, because I recently called Halifax and cleared the arrears bringing the account up to date, then when I spoke to MBNA about my other credit card they said you've got a DMP for the next 6 years on your credit report.

Considering Halifax were on the PayPlan setup, a DMP never appeared on my credit report for them, only MBNA. Unfortunately Lloyds never agreed to reduce charges or anything so I am literally paying O/D interest each month.

As you can tell, it is becoming a struggle. I have since become less inclined to go into a DMP because PayPlan never really helped me. I still had creditors hassling me, and so many letters in the post. It became very stressful.

I need to sort out my credit report ASAP, as I will be moving in with my girlfriend next year and if we need to get a mortgage I am going to be so stuck. At least if I was able to get a loan I could settle all debts therefore having less credit agreements on my file, and a clear indication that I have made regular payments to the loan itself.

In an ideal world I would like the DMP removed from my report so that in a couple of months my score may increase. Is there anyway of doing this through a dispute, arguing that I was never advised it would affect my report?

When you refer to snowballing, what exactly do you mean? I have never heard the term. Forgive me if I am being stupid!

Many thanks again,

Grinch.

Bored

Sorry I think I misread your opening post, I didn't realise you had been on a DMP. Snowballing refers to paying off credit card balances by overpaying the highest APR whilst maintaining the minimum payments on the others, however not relevant if your creditors have frozen interest.

I doubt you'll be able to get a consolidation loan, and I think the best way forward is to concentrate on paying off as much of the debt as possible because the 'settled' accounts will improve your credit report. I echo topcat9 to fill out and post a statement of affairs (SOA) so that people can advice on where you can free up extra cash for debt repayments.

topcat9

Whew, where to begin? First of all, without going through a proper SOA detailing every item of expenditure and income no-one can really see what your financial situation is (including yourself) so I do urge you to do one. However, the signs are not good (poor credit record already; use of payday loans; looking for a consolidation loan which you are unlikely to get) so I suspect you may be on a very slippery slope to a serious debt situation if not already there.

With regard to the DMP. A DMP itself is not recorded on a credit file but clearly, when you enter a DMP you do so with a view to reducing payments to creditors and obtaining reduced or zero interest rates. When a creditor agrees to this, they are perfectly entitled to record it on your credit file. Some mark it as 'arrangement to pay' or 'debt management programme', some just default you. I'm with Payplan myself and understood this from the start, so can't comment on why you weren't aware of this.

Sorry going to have to end this abruptly as I've got to be somewhere, but in brief I think you should post your SOA, take whatever advice is offered by those who look at it and possibly reconsider the DMP option. Good luck!!!

MrGrinch

Ye, I think I am just going to enter into a DMP again with CCCS this time, I have just been looking into it on their website and I think I'll call them shortly to arrange something.

My only concern is the payday loans; from your experience, do you know if companies like Wonga and Payday UK accept a DMP with an organisation such as CCCS? If I could enter into an arrangement with the payday loan companies through a DMP where they possibly reduce interest and allow me to make monthly instalments that would be perfect. Then at least I will feel a bit more stable. I just worry that they will not accept an arrangement and then I will be paying £150+ interest a month until it is paid! I don't really care about my credit rating anymore, because as explained above it is a pants report atm anyway!

My income will allow me to pay approx £275 a month to CCCS for the debts, so I can then just let the DMP run and forget about it, start living a normal(ish) life!

Your comments and suggestions are much appreciated.

Grinch.

Tixy

Payday loan companies often will accept repayment plans through one of the charities - in fact surprisingly some people find they are quicker to accept than their 'regular creditors'. (of course it can never be guaranteed that yours will do the same). One thing you do need to do with payday loans when entering a DMP is to make sure you open a new bank account elsewhere for your income so that they cannot take money out of your existing accoun that they know the details of.

Good luck contacting CCCS.

MrGrinch

Many thanks. I have another bank account which I can use.

Thanks again,

Grinch.