Freezing debt & improving credit rating

newlife2015

Hi all,

New to this website the advice to join off my mum

Two questions i need help with to get started.....

1. i have a £3000 overdraft with L***d's bank which i have had for about 3 years now. I have always paid £60 a month into that account to pay off the interest and fees but not paying any of it off. Today i decided enough was enough and it needed to go so i rang the bank up and asked if there was anyway i could freeze the account or "close" it and pay it off, i was told no and that there was nothing they could do. I was after advice on the issue above.

2. I got a copy of my Credit report and its 1 out of 5!!, i was shocked about this as the only debt i have is the one above which has never defaulted as it is a planned overdraft, i have found out thou that im not on the electoral register (which my gf has kindly fixed for me). I was wondering i could improve this?

Thank you for any advice given.

Thrugelmir

Convert the overdraft into an affordable loan. The bank is likely to accommodate your request.

newlife2015

I tried this already but because my credit score is so low they refused :-(

rockm87

could you not pay off more each month?

hohum

Hi,

Overdrafts are the evils. I found it very hard to shift mine, until I started viewing it as a separate debt. Are the debts in your signature your only debts? The problem is at the moment you are only paying interest, and that will not hel you shift the capital. What you need to be paying is £60 a month PLUS an amount to reduce the capital.

I was in exactly your situation in that I was not able to secure any other credit so I had to suck up the hideous interest rate. However, by managing my money I have been able to keep my savings in my overdraft, whilst I pay the balance of the overdraft back. What this essentially means is I balance transferred the debt from the bank to myself I have been able to do this with the hel of software called YNAB. It costs money to buy it but you can do a free trial. I also think you could do it by using the budgeting principles of the software, and excel or even a pen and paper.

nothing makes me happier then denying my bank that money! They made enough off me. As soon as I have fully paid off the overdraft, it will be bye bye to them.

If you can't meet your debt repayments without compromising essential spends (shelter, transport, food, bills), you may need to seek an alternative solution such as a DMP.

To help decide how to tackle your debts, I would do an SOA (link at top of page). You don't have to post it here, but people may be able to help you look at spending or decide whether you need to seek further help.

I was paranoid about the bank recalling the entire overdraft, so I chose to keep the account as my main banking and manage my budget so that I increase the amount left in my account each payday. My account is now in credit. If your SOA suggests you can't manage repayments, then you may need to default on the overdraft. This will completely ruin your credit rating but hey, it's pretty much as bad as it can get any way.

I would also say forget about credit rating for now and put to one side. Your priority is dealing with this debt. It is costing you at the least £720 a year which is crazy town. It has interest rates similar to a payday loan (it was after I realised the bank was getting away with this that I got really determined!)

The other thing I would say is make sure in your budget that you are putting aside for emergencies and irregular bills. This is something that has totally changed my finances! It used to be that any minor upset would send me deeper into debt. Now, I have a cushion so I don't.

It could be that you will be able to clear it quite quickly, or it may take longer. It will go though!

Time_to_face_the_music

newlife2015 wrote: »

Hi all,

New to this website the advice to join off my mum

Two questions i need help with to get started.....

1. i have a £3000 overdraft with L***d's bank which i have had for about 3 years now. I have always paid £60 a month into that account to pay off the interest and fees but not paying any of it off. Today i decided enough was enough and it needed to go so i rang the bank up and asked if there was anyway i could freeze the account or "close" it and pay it off, i was told no and that there was nothing they could do. I was after advice on the issue above.

2. I got a copy of my Credit report and its 1 out of 5!!, i was shocked about this as the only debt i have is the one above which has never defaulted as it is a planned overdraft, i have found out thou that im not on the electoral register (which my gf has kindly fixed for me). I was wondering i could improve this?

Thank you for any advice given.

Are you paying for a premium overdraft services, i.e. one that claims to offer travel/phone insurance, breakdown cover etc? If so, work out if the cost is really worth it, they rarely are, and you could make a big saving on those monthly charges and use the difference towards actually paying it off instead of just servicing the debt.

TTFTM x

newlife2015

thanks for this, today I have wrote a letter to the bank to try and claim back 3 and half years of fees for an account I couldn't properly use. I am hoping there will be a good outcome to this which will help me clear some of the debt. Any ideas about upgrading the credit rating would be welcomed as want to save up for a house over the next couple of years.

TrustyOven

newlife2015 wrote: »

thanks for this, today I have wrote a letter to the bank to try and claim back 3 and half years of fees for an account I couldn't properly use. I am hoping there will be a good outcome to this which will help me clear some of the debt.

I don't understand. Why would it be fair for you to claim back fees in this case? Why could you not use the account properly?

newlife2015 wrote: »

Any ideas about upgrading the credit rating would be welcomed as want to save up for a house over the next couple of years.

Yes. Pay off all debt. Then aggressively save until you have enough.

Edited to add:
If you do that, over a number of years, it means by definition that you have no defaults (because all debts are long gone, and defaults are gone after 6 years of saving), and you become good with money, saving as much as you can, getting the best interest paying current accounts etc. By this time you dont need (much) credit on credit cards also, this is less risk to the lenders. By definition, your credit rating improves.

Thrugelmir

newlife2015 wrote: »

Any ideas about upgrading the credit rating would be welcomed as want to save up for a house over the next couple of years.

If you can afford to save. Then you need to aggressively tackle the debt. Perhaps the bank feels as if you aren't making a real effort.