Loan Application

Matty007

I am hoping to consolidate some £15 000 credit card debt.

All debt currently on 0% and has been for some time, transferring balances and not defaulting on any due payments.

But it is becoming a chore each year and I acknowledge the risk of not being offered a deal when required.

My monthly payments would be reduced and finally the debt paid off in 5 years time on one of the advertised loans with AA or M&S @ 4.6% or 4.7%.

My query is would it be preferable to firstly apply with the M&S loan, as I have been a credit card customer of theirs and never missed a payment, or doesnt this really matter.

Would two applications effect my credit score, I assume this should be quite good, I have a steady job and a decent income £40 000+ and have not defaulted on any of my liabilities.

Over to you guys.

Matty

Caz3121

Although you have a good income you may still struggle to get the amount you require as when you take a loan there is no requirement for you to pay off the cards so you would be seen as having £15k cards and £15k loan so total of £30k debt which may be an issue against your salary with a lot of lenders

Cycrow

To consolidate £15k of debts you would need a loan of £15k, giving you a total of £30k credit. Ideally, this would require a salary of £60k+ so its likely you could struggle.

but if the debts are all currently on 0% then moving it to something that charges interest is only going to increase the cost. The only way the minimum payments would be lower is if you get the loan for a much longer term, costing a lot more in the long run.

it'll be better to use all your available more money to pay down the debts quicker, rather than just sticking to the minimum

Tixy

If the debts are currently 0% then I wouldn't move them to a loan.

If you cen keep the debt at 0% and your repayments are higher than the loan would be then your debts will be cleared in less than 5 years.

However if you are thinking of applying then applying to M&S makes sense (assuming you have used the M&S card sensibly). Even if you can get accepted for a loan it may well be at a much higher rate than the representative rates quoted.

2 applications in a short space of time shouldn't have a big impact on your ability to get credit. More than that may mean a short term impact on your ability to get credit.

Matty007

Ahh good points, thank you.

Actually some of that debt is on my wifes cards, my own credit cards only represent probably £5000 of that debt and another £5000 of unused credit, would that strengthen my hand or the association would still hinder this application ??

Tixy

That would likely increase your chance of being accepted.

For affordability primarily lenders look at your own debts + joint debts compared to your own income.
If you are associated they will also search her credit file but more for negative items rather than for affordability.

CLAPTON

are you saying you have an income of 40,000 + and debts of 5,000?

Cycrow

if you are looking at affordability, then its the total credit you have, rather than the debts.

some of it not being in your name, and therefore not counted in the calculation could help.

you should compare your total credit in your name to your salary, and ideally it should not be more than 50% (including the new loan amount)

Matty007

CLAPTON wrote: »

are you saying you have an income of 40,000 + and debts of 5,000?

No, I probably have approx £5 000 on my cards and the others happen to be on my wifes cards.

Its our debt ....... but of course for the purposes of a loan then as has been explained it seems the £5000 is specifically my debt.