'Very poor' credit score worry

luke1ok

Thanks for your post Fromply.

It's going to be difficult to pay off the Amigo loan any time soon.

The ideal situation would be for me to get out a £4k low interest loan or credit card and pay it off in full. Unfortunately I can't see any bank borrowing me that much or anything at all.

If I pay more than my regular payment per month will that extra be charged interest?

Regarding the credit card, is it really that wise to pretty much max it out per month and only pay minimum payment? I've been paying the full balance each month. It is low interest yes.

My debts are:

Amigo Loan - £3700
Natwest overdraft - £1,600
Credit card - £200

Thanks

Fromply

luke1ok wrote: »

My debts are:

Amigo Loan - £3700
Natwest overdraft - £1,600
Credit card - £200

What interest rate do each of them charge?

Fromply

luke1ok wrote: »

Regarding the credit card, is it really that wise to pretty much max it out per month and only pay minimum payment? I've been paying the full balance each month. It is low interest yes.

If it is cheaper than the other loans (which you say it is) - then you're better off have £200 of debt that you pay, for example 2% interest on, than £200 of debt that you pay 49.9% interest on.

Fromply

luke1ok wrote: »

It's going to be difficult to pay off the Amigo loan any time soon.

My view is that you need to, in your mind, view all your debt as one debt (so in your case, £5,500 debt).
Each month you should:
1) Plan to pay the minimum that you can on all 3 debts
2) Increase the most expensive debt to the maximum payment you can afford.

Your goal is to reduce (and completely pay off) the £5,500, not pay off your cheap debt in full quickly

Fromply

luke1ok wrote: »

If I pay more than my regular payment per month will that extra be charged interest?

From the Amigo Loans web site FAQ....

Can the loan be paid off early?
Of course! You can pay your loan off early without any penalty for doing so.

We calculate interest daily, so if you clear your loan early, you only have to pay interest for the time that you've had it.

EssexHebridean

Get yourself a Statement of Affairs (SOA) done luke1ok - you'll find the link at the top of the DFW board, in the "Sticky" post there. Consolidation CAN work, but not when you're bouncing debts onto a loan with a rate that high. Post your SOA onto DFW and you'll find you'll get help and pointers as to where you might be able to make savings on your outgoings. You'll also get some good solid advice over there about the best way to proceed from here, using that credit card, etc.

For the time being though, I would make your focus to get out of debt, rather than worrying about your credit history. Until the defaults drop off there isn't a lot you're going to do to shift it, anyway.

You mention "not yet" having a mortgage - you need to learn to budget before you even consider taking on a mortgage, IMO. Not least needing to save for a deposit, so for the time being, that credit "score" really isn't relevant to you at all.

Dobbibill

luke1ok wrote: »

.

The ideal situation would be for me to get out a £4k low interest loan or credit card and pay it off in full.

Don't fall into the trap of believing you can borrow your way out of debt..........this would perhaps be a better solution but far from 'ideal'.

If I pay more than my regular payment per month will that extra be charged interest?

You won't be charged extra interest on your additional payments. Your interest is calculated daily on the amount you owe, so if you make overpayments you owe less. This will mean you are charged less interest. As the balance reduces so does the amount of interest payments.

Regarding the credit card, is it really that wise to pretty much max it out per month and only pay minimum payment? I've been paying the full balance each month. It is low interest yes.

Don't max your CC out! While it's not a massive limit, stay away from the limit to make sure you don't exceed it.
If you pay via DD then try to aim for no more than approx 40% of your limit per month. This will be so that while waiting for the DD to pay off the previous month, the current months spending doesn't exceed the limit.