Catch 22

stanley25

My aim was to take a loan out to pay off my credit cards.

In the past I had been struggling with money and often needed two credit cards for day to day living, which gradually over the course of about ten years has reached around 9k.
Luckily for me 10 months ago I had a pay increase which has meant I have finally got to a point where I am no longer running over my overdraft limit and can meet all of my outgoings.

I have been a credit expert user for about 3 months, and currently my score is 'fair'. I have not defaulted on any payments in the last 12 months. But what I have realised since using credit expert is that my 'profile' has a maximum credit limit of about 21K. Before realising this, this year I have applied for and successfully been given credit for a car (10k) and an Argos card (£354).

Because I have 9k credit card, and 10kish outstanding on the car I am very close to my overall limit of 21K. So I seem to be in a catch 22 where I can't borrow monies to pay off the 9k. I am loathed to go applying for balance transfer cards every month (which presumably will only have a negative effect on my credit score) particularly when the majority which I might qualify for have a limit of £1200.

I have in the past approached my bank (Barclays) for a personal loan to pay the cards off, naturally they weren't interested (making money off me hand over fist on the credit cards so why would they want to help me out of that situation).

What to do? Should I just wait a few more months and hope that my rating improves further? What is it that determines that overall personal limit of 21K?

[Deleted User]

stanley25 wrote: »

What is it that determines that overall personal limit of 21K?

Risk and affordability. Let's say you earn £40k. You already owe more than half of your GROSS annual pay. If you borrow more, then your affordability will be absolutely shot (if not alraeady) and you'll collapse, meaning no one gets paid.

If you get a consolidation loan, you can't be forced to consolidate, you can just do out and buy more stuff.

Time to rein in the spending, pay back some of the debt and get back on an even keel.

stanley25

Thanks for the help.

Reining in the spending is really what I've spent the last god knows how long doing so I am trying :-) (Besides the car which I needed to carry on earning and the washing machine which was just one of those things).

So it is really a waiting game now? It's frustrating because the money out on the credit cards isn't reducing the overall figure, but the money out would be the same if it were a personal loan and the overall figure would be gradually going down. Boohoo.

[Deleted User]

Try to target the highest rate debt first and throw all extra money at your debts. Once you've reduced some of the debt, you will be more likely to be offered a card or alternative loan as you'll be less of a risk.

Also just noted you believe cards give a £1200 limit. That's not the limit - that's the representative example they give. Limits can be anything from around £200 to tens of thousands.

stanley25

Thank you for the advice.

If I were to call card companies, is there a way for them to determine my credit limit before being successful with an application? What I don't want is to be given a credit card and then subsequently find out the limit is of no major use to me. Otherwise this is just another loan outstanding against my name which will reflect badly on my score.

[Deleted User]

You'd need to apply before they could determine your limit. As they will need to chck your other debts and limits.

But even a small limit on a 0% BT could allow you to transfer some of your existing CC debt, and then pay down more and subsequently lower your other limits. But not so much that you look distressed (ie keep a decent gap between your balance and limit).

stanley25

Yes of course!
I have some money saved as a buffer, my plan now is to use some of this to get rid of the Argos card immediately. Wait until next month and see if this takes me from 'fair' to 'good' (unlikely I suppose). And then consider whether it would be a good time to try for a BT card and use it as per the above.
Again, thanks for the advice. Most appreciated.