Bad credit rating and high interest cards

bozzels

Need some advice on getting out of a vicious circle :-/

In summary there is a loan of £1600 with Lloyds, this isn't such a problem as there is minimal interest and after having a nasty run in with a debt mediator company this is running smoothly, at the moment.

3 credit cards (Natwest), all varying amounts:
£341 - pays off £10 a month (minimum), interest is £4 a month
£716 - pays off £20 a month (minimum), interest is now £14 a month
£60 - pays of minimum amount, due to clear this month.

The dilemma is to avoid this interest on cards because it just isn't paying off quickly enough with the amount going back on. I'd get an interest free credit card and transfer just these cards onto it BUT credit rating is bad at the moment so can't get one, tried before xmas and unfortunately denied.

Anyone have any other suggestions and also on getting credit history on it's way back to positive? - my suggestion is get a card for people in debt (i.e. high APR) and spend a little on it each month, paying it off in full.

Thank you

bargainbetty

You could wait until the third card is clear, and ask Natwest to provide you with a low life of balance transfer of the other amounts onto that card. You would then have to close down the other accounts to avoid further spending.

Increase your payments to the minimum plus £1. You'll look better if you aren't just paying the minimum, and bizarrely that is enough to not get the minimum payment marker put on your report.

Use the payment you would have made to the third card once it is cleared to throw at the highest interest debt, and bring it down further.

Try to raise further funds, (ebay, boot fairs etc) then make over payments (however tiny) via online banking, and just keep plugging away.

Are you on a debt repayment plan, as you are not permitted to take out more credit (even if it is to rejiggle your existing debt). It will also mean efforts to repair your credit file are pretty much pointless for six years from the date it began.

You can use what you have more effectively, but to be honest, you are very likely to just have to knuckle down and throw your money at the debt. If you can clear a card and don't get a balance transfer, use the card you have for one small purchase a month and then clear it.

It's difficult with knowing if you are on a DMP, to be honest.

Tixy

Whilst you are paying off your current debts there is not much point in applyign for and using a high interest card if its just about building your credit history.

What actually shows on your credit files in relation to your current debts? Is there a default in relation to the loan? any defaults or missed payments on any of the 3 cards?

What are the APRs on your current cards?

Have you stopped all spending on the existing cards?

Willing2Learn

Hi bozzels and welcome!

Managing your active credit accounts and not missing any payments is the best method to rebuild a poor credit file.

Try the Aqua Reward card. It's designed for people with a poor credit history. It pays 3% cashback on all purchases up to a maximum of £100 annually. The cashback will offset some of the interest you are paying on your other cards. Very high APR. Just use for your normal groceries, shopping, travel costs and pay the balance in full each month.

With your current card debts. The most efficient method of repayment is to just do minimum payments on the two cards with the lowest APR and pump all excess funds from your monthly budget into the highest APR card to pay that one down quickly. Once that card is cleared, shift the focus of your attention to the next highest APR card. This method saves the most money in terms of interest. This is assuming that you are not adding to the debts on these cards with new purchases.

bozzels

Thanks for the advice so far

To answer.
No the cards are no longer being used to spend on and haven't been for some time now, just been plugging away with the minimum repayment as that's all I can do each month.
Interesting bargainbetty about paying just over to stop it showing as just the minimum payment, will put that in place.

I suppose the Lloyds loan is a "DMP" as basically what happened there was that i was in much more of a pickle and fell for the promises of a debt management company who I paid my money to them and they paid the bank....little did I know for months that they were taking most of my money and just paying the bank absolutle minimum amount.
Lloyds got in touch and luckily saved it just in time, they set up an amount for me to pay each month that was manageable and allowed minimum interest to be applied.

The cards are just with Natwest and doing me no favours as I am hardly paying anything worthy off because of the interest.

I was considering going to Natwest once card 3 was paid to see if they can assist me with the final 2 cards to make it any easier on me?
Not sure about my credit file, after reading Martin's advice on here, this week I was going to sign up to Experian etc (trial) and look at all my files to check they are correct before cancelling membership.

Will have to check on APRs on cards, can't remember off the top of my head.

I spotted the Aqua card. If for example I got that and just paid for my monthly petrol on it and paid it off in full from my wages, that could only be a good thing, right?

Tixy

It sounds like you have a default on your file from your loan. If you have then getting a new credit card and repaying in full is not going to make much difference to your file.

But earning cashback is a good thing if you are certain you will repay in full every month and so not pay any interest.

But ideally you need to be focusing on ways to increase how much you can pay off your existing debts each month. Have you been through all your outgoings to see what you could possibly get cheaper or reduced or cut out to put more to the debts?
Once the 3rd card is paid off you will presumably be able to pay more towards the other 2 cards a month? Card 2 looks like the higher APR so pay anything extra you can afford to that debt first.

Willing2Learn

bozzels wrote: »

I suppose the Lloyds loan is a "DMP" as basically what happened there was that i was in much more of a pickle and fell for the promises of a debt management company who I paid my money to them and they paid the bank....little did I know for months that they were taking most of my money and just paying the bank absolutle minimum amount.
Lloyds got in touch and luckily saved it just in time, they set up an amount for me to pay each month that was manageable and allowed minimum interest to be applied.

Are you on a DMP or not? It makes a big difference when trying to give accurate advice....Did you cancel any agreement you had with the debt management company?

Do you have any defaults registered? I so, how many accounts are registered with a default? What are the dates of the defaults?

Edit: If you are looking for professional advice on debts then use a company that provides their services for free, such as Stepchange or National Debtline etc

KT2802

bargainbetty wrote: »

Increase your payments to the minimum plus £1. You'll look better if you aren't just paying the minimum, and bizarrely that is enough to not get the minimum payment marker put on your report.

This is interesting and I was unaware of this too.

Not wishing to hijack this thread but I also have a similar dilemma in that I have 2 credit cards that have fairly high interest rates on them and it seems like I am just paying off the interest each month.

My recent credit report was fair. I have never missed any payments on any debts or gone over my limits but I assume this rating is due to the amount of debt I have (see sig). I would really like to transfer the credit cards to 0% deal or a lower APR card but I think it is unlikely I will be approved.

Just wondered if anyone had any suggestions around this or whether advice would be the same i.e. throw all extra money at highest interest rates

bozzels

Willing2Learn wrote: »

Are you on a DMP or not? It makes a big difference when trying to give accurate advice....Did you cancel any agreement you had with the debt management company?

Do you have any defaults registered? I so, how many accounts are registered with a default? What are the dates of the defaults?

Edit: If you are looking for professional advice on debts then use a company that provides their services for free, such as Stepchange or National Debtline etc

I would need to have a closer loook at LLoyds paperwork as to whether I am on a DMP with them. The DMP I was on with this other company who screwed me about is definitely over now. However that would have left a mark on my credit file and this week I am going to check my report on Experian etc.

Having not completed a check on my credit history before can you advise whether I'll see the defaults there?

bozzels

Thanks @Tixy, would definitely repay in full with this new card, it was just an idea to start improving my credit file.
As I mentioned before I am no longer spending on these credit cards they are just hanging over me and I want to pay them off as quick as possible

I may go into Natwest and see if they can offer me any help to consolidate these. Biggest shame is not being able to get an interest free CC to transfer it onto!

Interestingly after a search on moneysupermarket 2 days ago to see what credit cards were available to me, my score came up as very low for most cards, when I looked on loans my score was much higher - but so was the APR. I immediately had a call from a loan company offering me £3k over 3yrs to consolidate everything. But I would have ended up paying £1500 for the privelege which I recon works out a lot more than the interest I'll get on these cards.

Tixy

bozzels wrote: »

I would need to have a closer loook at LLoyds paperwork as to whether I am on a DMP with them. The DMP I was on with this other company who screwed me about is definitely over now. However that would have left a mark on my credit file and this week I am going to check my report on Experian etc.

Having not completed a check on my credit history before can you advise whether I'll see the defaults there?

A DMP refers to a managed plan to pay back all of your debts at a reduced payment level, usually through a third party.

It sounds like what you have with lloyds is a reduced payment arrangement - whereby you are paying less that the original contracted amount.

I'd imagine it is fairly likely there will be a default on your lloyds account, but possibly it could show as an arrangement to pay.