SOA - got the hard hat on - straight talking required!

rising_from_the_ashes

OK ... if it were me

Cut down on as much as you can - looking at your SOA there's certainly a few savings that could be made each month.

For the next 6 months, put this money into extra payments on the card with the highest interest rate.

However, you must pay more than the minimum on the others (even a few £s otherwise these will show up on your credit report with a big fat M beside them, which doesn't look good to a lender).

Sell anything you can and also put this extra money to the debts.

I'm sorry to say that with the missed payments, I'd be surprised if you were accepted for a loan of that amount with a good lender (yes, there are "not so good" ones out there but you don't want to go there).

After the 6 months, take stock and see how it's going ... you may feel you're able to continue as you'll have "got into the habit" by then.

If you're still seriously considering a loan at that point, you'll have more change of being accepted (but no guarantees) as a) the debts will be lower b) you'll have been paying more than the minimums on all the cards c) the late payments will be further away.

rising_from_the_ashes

For instance, my credit card has a limit of £5k on it. I usually spend between £500 and £800 / month on it - but it's cleared in full each month.

If a lender looked at my credit report, they'd see that I'm nowhere near using the credit available to me (ie it's cleared each month so I have 0% of the credit available to me outstanding) - this is a big plus for a lender.


If they looked at yours, you have approx £21k available credit on your cards (taking the closed accounts to the nearest 100 above what's outstanding).

However, as you've got around £19,300 outstanding, you're using nearly 92% of the credit available to you, which is a very high in lenders eyes.


If you can get the balances down a bit so the amount of outstanding debit is lower compared to your available credit, it may help if you still wish to go down the loan route.

Hope that makes sense (I'm not always the best at explaining things).

JimmyTheWig

rising_from_the_ashes wrote: »

However, you must pay more than the minimum on the others (even a few £s otherwise these will show up on your credit report with a big fat M beside them, which doesn't look good to a lender).

I didn't know that.

JimmyTheWig

EKAndrew wrote: »

ok, hypothetically, if I were to call all my CC lenders and close the accounts - but continue to pay them monthly - would that make a difference as there would be "no available credit" ???

Or would they look at the info, and say "this guys closed all his accounts with alot of outstanding debt? he might be trouble?!?! Or would they think its a sensible choice?

Wouldn't make much difference as yuo'd still owe the money that you currently owe.
My gut reaction is that it would make things a bit worse, but I don't know.

rising_from_the_ashes

JimmyTheWig wrote: »

I didn't know that.

Neither did I until I got a copy of my reports and there were some big Ms beside some of the credit card payments from last year.

When I was clearing my debts I paid the minimum to the card with the lowest interest and concentrated on the higher ones ..... unfortunately these now have big fat, impossible to miss Ms beside them:(

The reports now show the outstanding balance each month and what you've paid - even if you pay only a couple £s more, it avoids this big M.

JimmyTheWig

EKAndrew wrote: »

We have already traded in Xbox games

Nice one. Moving in the right direction.

so we could get the new FIFA12

D'oh!

as no cost to us.

No. No no no.
This was not at no cost to you.
You could have sold / traded in those games and used the money to pay off debts.

turbo.jet

Every lender assesses potential customers (read: risk) differently, but it would be based on your previous behaviour. I'd say the fact you are maxed out and have late payments showing would be the red flags to them though. They want to see regular payments, but behaviour that makes them money in the long term.

As for 'consolidation' I both agree and disagree with what's being said here, based on my experience.

(Forgive me for this long story on your thread about my history, but hopefully it helps. )

I can safely say without a shadow of a doubt it was consoldation loans that got me into trouble. My bank happily doled personal loans out to me (back in the pre crunch glory days), sometimes twice a year, once they gave me 2 in two months. Always paying out previous loans and always with a little bit more to pay off other cards and maybe meet an immediate cost I'd hit which led me into the branch in the first place.

Andy by the way, every time I did it I always kept "just one credit card just for emergencies". My warning siren goes off when I hear this now.

I was young, naive and uneducated and stupidly trusted the bank. The bank must have realised I was living beyond my means but were making a fortune off me. My signature tells the tale.

HOWEVER, I also used consolidation to help me out of the mess. By nature I'm very organised (some say anal and OCD) and felt more panicked and 'drowning' when I had several different debts spread over the place.

ONLY once I had truly had the LBM and stopped living on credit was I able to use consolidation to my advantage. A very long 0% deal on a card not only reduced my interest payments to nothing, so I was tackling only the principal, but also put all the debt in one place, making me feel calm and in control of the situation. One easy debt reductive payment to make each month. When I got the card I made a note of the long number so I could make repayments, then shredded it. I didn't open the letter with the PIN number, I just shredded the whole thing. It's not a form of spending, its a debt card. A loan.

Your day-to-day life needs to be just as impacted after you consolidate as it was before when the thumbscrews were tight. You have to reduce the debt. Cancelling all the cards as well as shredding them. You can re-build your credit score by making regular repayments off your mortgage.

I guess only you can truly tell where you are on this journey. Good luck!

turbo.jet

JimmyTheWig wrote: »

No. No no no.
This was not at no cost to you.
You could have sold / traded in those games and used the money to pay off debts.

My thoughts exactly! Especially after sitting up half the night scanning barcodes into the music magpie website.

YORKSHIRELASS

Hi

I can identify so much with your experience - using credit to pay for the extras then life throwing a spanner in the works so that your income goes down dramatically.

For me the problem with the Consolidation loan was that I saw it as a quick fix and thought my debts were sorted. I didnt really change my lifestyle and worse still didnt keep accurate records of my spending. I ran the debts up again through just spending a bit more each month than I could afford.

Fast forward a few years and we are now paying the debts off the hard way. This means no going out (I go in a pub once a year at Xmas), very cheap holidays, no buying alcohol, no treats, only buying clothes when we really have to etc etc. Yes it sounds grim but its the only way we are going to get out of this mess. And believe me I have learnt my lesson.

Good luck whatever you decide to do.

JimmyTheWig

turbo.jet wrote: »

Every lender assesses potential customers (read: risk) differently, but it would be based on your previous behaviour. I'd say the fact you are maxed out and have late payments showing would be the red flags to them though. They want to see regular payments, but behaviour that makes them money in the long term.

As for 'consolidation' I both agree and disagree with what's being said here, based on my experience.

(Forgive me for this long story on your thread about my history, but hopefully it helps. )

I can safely say without a shadow of a doubt it was consoldation loans that got me into trouble. My bank happily doled personal loans out to me (back in the pre crunch glory days), sometimes twice a year, once they gave me 2 in two months. Always paying out previous loans and always with a little bit more to pay off other cards and maybe meet an immediate cost I'd hit which led me into the branch in the first place.

Andy by the way, every time I did it I always kept "just one credit card just for emergencies". My warning siren goes off when I hear this now.

I was young, naive and uneducated and stupidly trusted the bank. The bank must have realised I was living beyond my means but were making a fortune off me. My signature tells the tale.

HOWEVER, I also used consolidation to help me out of the mess. By nature I'm very organised (some say anal and OCD) and felt more panicked and 'drowning' when I had several different debts spread over the place.

ONLY once I had truly had the LBM and stopped living on credit was I able to use consolidation to my advantage. A very long 0% deal on a card not only reduced my interest payments to nothing, so I was tackling only the principal, but also put all the debt in one place, making me feel calm and in control of the situation. One easy debt reductive payment to make each month. When I got the card I made a note of the long number so I could make repayments, then shredded it. I didn't open the letter with the PIN number, I just shredded the whole thing. It's not a form of spending, its a debt card. A loan.

Your day-to-day life needs to be just as impacted after you consolidate as it was before when the thumbscrews were tight. You have to reduce the debt. Cancelling all the cards as well as shredding them. You can re-build your credit score by making regular repayments off your mortgage.

I guess only you can truly tell where you are on this journey. Good luck!

I don't often quote in full, but I thought this was worth it.

OP, I think you should print this out and stick it on your fridge / front door / wallet. This story says it all.

Well done, turbo.jet.