Thinking about a loan to repay other debts?

Money_Rollercoaster

BatchedMetting wrote: »

We both managed to get a balance transfer credit card from Virgin which will take on most of the debt and now will apply for one or two more to take it all.

You've definitely done the right thing. I hope you've got your budget(s) sorted and have an eye on how much you can afford to pay off before the offers expire. Good luck in getting those debts paid off!

BatchedMetting

Thanks. They are about 40 months so hopefully we can pay a fair bit down by then, then switch to another card.

GazNicki

If you're paying £269 now to a card with a balance of £11900, then that same repayment plan would clear off that balance in around 45 months. If the card is 0% for 40 months, then you stand a good chance of that card balance being cleared to 0 within 4 years without trying to obtain another card - which would be a better place to be than applying for another card for another 0% period.

Your current card has a credit limit of £12000, so your new card must have a higher limit (there will have been a fee for the balance transfer I assume, and the balance + the fee would need to be <90% of the total balance) which essentially means you potentially would have £25k of available credit after the card is cleared.

I personally wouldn't want anymore available credit to me from that, as having too much available can also impact your credit report.

Now that you have joined the Credit Club, make sure you log in monthly to get an updated report and keep on top of things.

BatchedMetting

Thanks! We're just waiting for the paperwork to come through, then we will have a better idea of what's going on.

If we could clear a good chunk before the 4X months are up, that would be great.

I thought to have unused credit available to you looked good on a credit card report?

What's the ideal situation on a credit report then?

Just as we get this sorted, my phone breaks, so now I've got that to sort out now! Two steps forward, one step back!

Thanks,
Joe

GazNicki

Having too much available credit can reduce the liklihood of having more credit being given to you.

Imagine asking for a £8k loan for a second hand car, but your credit report shows £25k credit available on 2 credit cards, £5k available on a Very Account, and £2k available on an Argos account. That's £32k available to you, yet you want an £8k loan.

While that may not make them say "No" in itself, some lenders see too much available credit as a negative.

Conversly, creditors like to see long standing relationships - so don't go closing the newly cleared credit card off either. That would also be bad for your report.

It is all about balance, and even then it isn't a science. It's an art that is very much in the eye of the beholder. Keep your credit report as clean as you can, and try to manage your available now.

I am in a similar boat now, where we are getting our finances in order. That means making some sacrifices for the next few years to clear off a huge chunk of debt. Then we can seriously look at buying our own home.

My biggest killer on my report is actually my Virgin Media Account, which has a number of late payments on it. So check your utilities too. Try and manage them as well as your credit card as these often go forgotten.

BatchedMetting

Thanks! Yes, I've been keeping an eye on my reports lately after years of neglect.

There are no areas or late payments on them which is good.

GazNicki

Good stuff. Hopefully, this time in the next few years, we will both be looking at getting our own homes instead of renting. Hopefully. Good luck.

BatchedMetting

Yes, fingers crossed!