Loan to clear Credit Cards?

Kenny_B

Hi Folks,

Just wondering If it would be advisable for me to get a loan to pay of some credit card debt I currently have?

I have an MBNA with £3500 on it (at limit) with 1.4% monthly interest on £2.2k of it and 1.3% on the remaining £1.3k

I also have a RBS card with £1400 on it (£1.7k limit) not sure of interest rate but this month around £18 added against no purchases just the total sum.

Now I know you shouldnt chase debt with debt but im thinking a £5k loan, pay of both cards. Cancel the MBNA card althogether. Cut the RBS card up but keep it available for the future and as viable creditt for my credit history.

Works out about £110-130 per month over 4 years dependant where I get the loan, is one payment and I can simply pay at the beginning of the month and forget about it.

I think this would look better on my credit report as well for future mortgage applications, having one loan out rather than two maxed Credit Cards?

Advice?

Thanks in advance

CLAPTON

how much are you paying each month on each CC

Kenny_B

@ You-Kip - My credit report is a bit of a shamble at the minute, being rectified at the minute, once sorted should show 5 missed payment on an overdraft 4 and a half years ago, account settled now. No other missed payments.

https://forums.moneysavingexpert.com/discussion/4546215 I posted about my report here, not sure if a default on my account relates to HSBC account mentioned above or due to an error with an account which is being rectified. I have a £19.5k salary

@ CLAPTON recently £40-50 of the RBS every month and the minimum against the MBNA, was around 75-70 becuase I had (willingly!) taken a lifstyle protect which I have cancelled. Going forward I have a lot more room for movement in terms of what I can pay.

Apples2

With such a poor credit file it s unlikely you would be accepted for a loan, if you do, it will carry an interest rate which reflects your risk (high).

Have you addressed why, over time you have managed to spend £4,900 more than you earn due to piling it up on plastic?
If your lifestyle hasn't changed significantly, you will end up accruing more debt on the cards pushing you closer to disaster.

Don't make minimum payments on a credit card, add just £1 onto your payment (they can see if you make minimum payments which is a bad thing).

Kenny_B

Is a soft quote registered on your credit report?

Im waiting on my bank to remove 8 missed payments form my credit report, agreement was made to do this however still waiting to be updated. After this is through I will try the soft quote. Credit score is 575 at minute, but should be much much better once the change come about

Kenny_B

@Apples

Yeah its been addressed, was stupid, nothing really to show other than a holiday or two and a few presents.

I will be beginning to make bigger payments going forward, for a while I was streteched with paying off an overdraft and car as well. Car is now fully paid for, over has two more payments and its gone, then its down to me and these two cards.

Also, if I took a loan, in no way would I begin to spend on cards again, if need be I would just cancel the both of them to be rid, Ive realised the error in taking them in the first place, and the problems they can bring, I just want to set out the best path going forward.

I think having a set figure to pay would suit me rather than the option of paying more or less a month

Apples2

Sell the car, clear the debt, buy a banger. Job done

Soft searches wont show but it is only an indication of your chances of acceptance, they will still do a full search if you apply.

DCFC79

The score of 575 or whatever it will be once the missed payments are removed is pointless/worthless since the lenders dont see this.

Kenny_B

Ive just been reading through other threads and realised the worthlessness of the credit scores I see when I check experian!!

However I do need to get the missed payments removed.

Taking that into account Im pretty sure I will have a poor credit file if you will, given the maxed credit, and small payment history etc. Think I tried for a credit card in the past to try and transfer both to and was rejected which wont have helped either.

I will probably not look for a loan taking in all this info, taking on more credit, running the risk having another refusal etc.

Is there a way of seeing exactly what a lender will see in regards to my credit history? If im right in assuming the one I see in Experian is a more simplified version?

DevCoder

No the lending criteria is strictly guarded otherwise people could use it to exploit the system. Each lender has their own criteria.