Credit rating must be absolutely ruined.

laurarachelj

I used to have a full time job and didnt think twice about taking things out on credit because I could afford them. I had two credit cards with terrible interest rates of 34.9%. Last year I got ill and had to leave my job which left me with no income. I became a student and so only have a student loan, most of which goes on credit bills from my previous stupid life. I have matured a lot with money recently and budget my money and always keep an eye on my accounts at least twice a week. However, I have a credit card with £500 on it, I have managed to get it down to £ 413.83 but have not spent money on it for months and months and am paying more than the minimum payment. With an interest rate of 34.9% though, it is very expensive. In the past I have been very stupid with my money by not keeping tabs on it and forgetting to pay bills and going over overdrafts by forgetting to move money around. I have paid off my catalogue accounts (I had three) and closed them down, I have paid off one of the credit cards that I had and closed that down, I now have a student bank account so have no overdraft fees to worry about (I will save as soon as I am well enough to work). I have also taken out payday loans in the past too, I paid them all off in full over a year ago now and have frozen and closed the accounts. I do realise I have been very stupid and ruined my credit rating now. Anyway, the only debts I have left are about £200 that I pay £28 monthly to Apple for my iPhone, my phone contract and my partners phone contract is in my name, my £1000 overdraft and my £413 credit card balance.
Today on the Martin Lewis money show he explained about balance tranferring a credit card balance. Now, I never understood what that meant before but I do now so I just made the fatal mistake of trying to apply for a credit card with a better rate to transfer the balance to. I got declined. Being a student and being too ill to work, will I ever pay this credit card off or am I just throwing my money away in interest?

Have I totally ruined my credit rating and what can I do to improve it? I really have learnt my lesson with being stupid with money its just a shame the industry is so unforgiving.

Thrugelmir

laurarachelj wrote: »

its just a shame the industry is so unforgiving.

Lending is priced on risk and factors in the losses that are incurred when people default. Fact of life. Hard hitting but fair.

Stick with it. Sounds as if you have learnt your lesson. Experience is something that can't be bought.

Tixy

Your credit file at the momet is probably pretty wrecked (not from applying for a card recent but from you past issues).

But the thing with credit files is that time improves them gradually. Keep on top of repayments going forward and steer clear of payday loans.

Stick with your repayments and paying what you can even if just the minimums, once you are able to work again then clear it as soon as you can.

CKhalvashi

Thrugelmir wrote: »

Lending is priced on risk and factors in the losses that are incurred when people default. Fact of life. Hard hitting but fair.

This is pretty much the nail on the head. Keep working at it, and by staying with same providers etc, you'll be able to possibly get the cost of the credit down.

I have a card that started at c.50% in c.2003, and is now at 19.9% representative. Keep working on it, get the debt down, and just put a tank of fuel on the card each month, and you'll get the credit 'rating' and not pay any interest.

Stick with it. Sounds as if you have learnt your lesson. Experience is something that can't be bought.

Which will be useful for OP in 5 years when the default comes off.

CK

neil_9999

You're credit is probably pretty bad I'm afraid...

The theory of moving debts to the place where you pay the least interest is a good one, but can be difficult if your credit is bad to start with.

Try phoning you're credit card company and ask for a better rate - they know you so have you're account history showing how well you keep payments. Don't stop paying but mention that you are finding it hard to pay (even if you're not). They will say no, but complain! For them it is better you pay a little less than nothing at all and they have to sell it to a debt collector. But you'll probably have to talk to management to get to this through to them.

The overdraft (and credit card for that matter) may be better as an unsecured loan - be VERY careful and do the maths for the interest. Borrowing more is rarely the way to get out of debt. Try your bank for this, again they know you. Don't go to the likes of Ocean Finance!

To improve credit you need a good hstory. So you need a credit card that you spend £50 a month on and clear right away...every month, year after year. If the idea above turned out a good one, the loan would also help this.

It will take a long time. Defaults are on your account for 6rs but an unblemished record for a year or two should see things improve. I've done this, actually I still am and I'm quite proud I've just got a mortgage with 2 defaults. So don't despair, it's possible...