big credit card issue

pws1968

hello,

I have credit card debts of approx £91K which i am only paying minimum payments on. is it better for my credit report if i have all of these consolidated on one secured loan.

the reason i ask is that i will be needing to reapply for a mortgage in 6 years time when my current interest only deal comes to an end. and at the moment my credit score is very low.

i haven't missed any payments or have any ccjs etc.

matchboxfull

Do you mean unsecured loan?

I'm not sure about the implications on your credit file, but I can't see you getting a loan of that amount unless your income is exceptionally high.

If you did mean secured loan, as in adding it to your mortgage, you need to think about the implications of that. Do you have enough equity in your home, for example?

To be honest, though, with debts that level, I'd gently invite you to come on over to the Debt Free Wannabe board to see if anyone can help. Everyone is very friendly there.

20aday

When you're using the "Debt Free Wannabe" forum I'd suggest filling out a "SOA" form found here:

http://www.stoozing.com/calculator/soa.php

That way people will be able to help you see better where you can cut back on the non-essentials.

Consolidation Loans rarely work; yes you'd be paying back £X amount per month but you'd have to be very disciplined not to undo the work by accruing further debt.

A few years ago I was very generous with money; I went to the bank for a consolidation loan. They declined me and quite frankly I'm glad they did. I found out the hard way *but* I know for a fact I'd have been back to square one if I had been approved.

SeanG79

Its not usually a good idea to convert unsecured debt to secured debt.

the actual score is meaningless, but it seems like you have a LOT of unsecured debt, but we dont know what your income is.

[Deleted User]

unsecured debt can quickly become secured if a charging order is made in the event of defaulting on unsecured debt repayments.

Ebe_Scrooge

Whether your debt is in the form of credit cards or loans is largely immaterial. What any responsible lender will look at is your repayment history together with "affordability" - which roughly means the amount of outstanding debt vs your income, from which they extrapolate your ability to service the debt.


91K on credit cards seems an unusually high amount, but as someone previously pointed out, we don't know your income.


Ultimately, as long as you're servicing your debts without any problem, and your debt/income ratio fits the lender's criteria, then there's nothing to gain and potentially a lot to lose by taking out a loan to settle the cards.


The very best thing you can do in order to increase your credit-worthiness ( not "score" ) is to concentrate on reducing the level of outstanding debt, whatever form it's in. This then gives you a much healthier debt/income ratio, which is one of the primary factors any lender will look at.