Applying For Loan - Credit file

INAMESS

Hi I want to apply for a loan to pay off outstanding credit card debts. I know that lenders will do a credit search, I have just finished paying off a car HP agreement literally two days ago, should I wait until next month when my credit file will have been updated to show this? Or should I just apply now as it probably won't make much difference as to whether I'm accepted for a loan or not anyway?

Ebe_Scrooge

In terms of getting accepted, it would be best to wait until your credit file has been updated.


However .......


Consolidation loans are often not a good idea. Firstly, the temptation is to use the loan to clear the cards, then simply start spending on the cards again, the end result being double the amount of debt.


Secondly, lenders will look at affordability. They have no way of knowing that you really will pay the cards off, so will assume that you'll blow the loan on a holiday or whatever, and still have the card debt to deal with. So you may not get accepted anyway.


A better approach is to see if you can shift some of the debt to a 0% card, coupled with going through your budget with a fine toothed comb and make savings wherever you can. Throw every spare penny at the debt, and it'll soon be gone, and you'll have saved yourself a load of interest as well.


If you post an SOA on the debt-free-wannabe board, the good folk there can help you with your budget. Hope this helps.

Candyapple

INAMESS wrote: »

Hi I want to apply for a loan to pay off outstanding credit card debts. I know that lenders will do a credit search, I have just finished paying off a car HP agreement literally two days ago, should I wait until next month when my credit file will have been updated to show this? Or should I just apply now as it probably won't make much difference as to whether I'm accepted for a loan or not anyway?

Don't be so sure it will be updated in the next month's update. Some companies take up to 3-4 months to update the CRAs.

Have you tried the loan eligibility calc first?
https://www.moneysavingexpert.com/eligibility/loans-calculator/

What does it say?


Please list all credit card limits along with outstanding balances.

Do you have any other loans / overdraft / car finance etc?

Do you have any late payments / defaults / CCJs?

What is your annual salary?

How much loan amount were you looking to apply for?

INAMESS

I know a 0 interest credit card would be best but as I already have 4 cards already which I want to pay off I would be worried that I might not be accepted for a 5th? Plus I only tend to get offered a limit of £1000 on new cards. I don't have any other loans, finance etc, no ccjs etc.
I've one card limit £3800 - balance £3600.
Another card limit £2000 - balance £1200.
Another card limit £1000 - balance £925.
Another card limit £1000 - balance £200.
The loan I'm thinking of getting is around £6000 over about 5 years.
My salary is £23k
I just tried the calculator and it did say there were one or two banks that I'd have a good chance of getting a loan with, although one thing I found odd was that one bank which Experian say I'd have a good chance with it said on here I'd have no chance with! Confused lol

[Deleted User]

Now that you're no longer paying for the car, I'd spend a few months getting some of those balances down to improve your chances.

Especially those where you're within spitting distance of the limit.

INAMESS

I understand what you're saying but is it worth doing that with the amount of interest I get added every month anyway?

Ebe_Scrooge

INAMESS wrote: »

I understand what you're saying but is it worth doing that with the amount of interest I get added every month anyway?

It's definitely worth it. How much were you paying each month on the HP agreement ? Start off by paying that same amount each month ( in addition to what you already pay ) to the cards, ideally the one with the highest APR.


The amount of debt on the cards is not massive in the grand scheme of things. If you're determined, and disciplined, and willing to tighten your belt for the short term, you'll have those debts cleared a lot quicker than the 5 years you're talking about taking the loan over.

Candyapple

INAMESS wrote: »

I know a 0 interest credit card would be best but as I already have 4 cards already which I want to pay off I would be worried that I might not be accepted for a 5th? Plus I only tend to get offered a limit of £1000 on new cards. I don't have any other loans, finance etc, no ccjs etc.
I've one card limit £3800 - balance £3600.
Another card limit £2000 - balance £1200.
Another card limit £1000 - balance £925.
Another card limit £1000 - balance £200.
The loan I'm thinking of getting is around £6000 over about 5 years.
My salary is £23k
I just tried the calculator and it did say there were one or two banks that I'd have a good chance of getting a loan with, although one thing I found odd was that one bank which Experian say I'd have a good chance with it said on here I'd have no chance with! Confused lol

Your debt to credit ratio is sitting at 76% which is quite high.

Enter your debts here to calculate how long it will take to pay them off:
http://www.whatsthecost.com/snowball.aspx

Are all your cards 0% cards that have ended and you just never cleared them or some other reason? Rather than looking for a consolidation loan (they never work) you need to look at the root cause of your debt and why it hasn't been cleared before you can begin to tackle it head on and make sure you are never in that position again.

Why not post over on the DFW board, they are good for advice on budgeting and tackling debt further:
http://forums.moneysavingexpert.com/forumdisplay.php?f=76

INAMESS

Is there any reason why Experians recommended loan providers are not recommended when using this sites eligible lenders?

Candyapple

INAMESS wrote: »

Is there any reason why Experians recommended loan providers are not recommended when using this sites eligible lenders?

Probably because they pay Experian to be used in their search results.

You never answered the question as to what the loan eligibility checker results showed (MSE one).

INAMESS

The search said there were a few banks which I had a good chance of getting a loan with