Advice on applying for a balance transfer

gen789

Hi all,

I'm new to the forum so apologies if I've posted this in the wrong section.

I've been on the phone to banks and credit card companies all day as I'm looking at applying for a new credit card in the near future and transferring some of my existing balance over.

I've been struggling with low credit score for over a year, but thankfully it has now normalised as I had a delinquent account which seems to have now disappeared from my credit report. My experian score was 480 and it has now gone up to 834.

My barclaycard, which I've had for over 5 years now (started at £150 limit, now at £8,500), is utilised at about 95% (not good, I know) and the APR on that is 29%.

Most of the money was spent on living expenses after I graduated as there was a period of time where I was unemployed. I'm now in full time employment, making a decent living and keeping my expenses as low as possible to try and save money and build up my credit rating.

Even though I've mostly been paying in the minimum monthly instalments towards my barclaycard (between £200-250 p/m), all my payments have always been made on time and there's never been any problems. This was confirmed today when I spoke with barclaycard support who said that my account looks healthy (other than the high utilisation percentage of course).

Recently somebody advised me to look into applying for a new credit card with an interest-free balance transfer (and preferably lower % APR if I'm eligible). It would make my life so much easier if I can transfer like £5,000 to a new card and get a break from interest for a while.

I looked at MBNA because they have an eligibility checker which doesn't run a hard check. I tried with the "0% for up to 32 months with 0.64% handling fee" - the system said I'm not eligible but recommended me to apply for "0% for up to 18 months with 3.49% handling fee".

Now here's the other thing - I also have in my savings account around £3,000. Pending some advice on this, I could put 1 or 2 thousand of that money towards clearing a part of my barclaycard balance, and then applying for a new credit card after. I'm just trying to find out if that would improve my chance of getting accepted for a balance transfer (and a decent deal).

Could someone please advise on the likelihood of me being accepted for an interest-free credit transfer taking into account the information I've shared about my financial situation? Should I apply now or pay some money into my barclaycard first to bring my balance down? Which providers tend to give the best deals with lesser requirements for high credit score etc?

Any advice on this would be hugely appreciated and I would be happy to pay some money to receive guidance with this from someone with more experience than me. Banks seem quite reluctant to provide any specific advice on this due to their policies.

Other information that might be relevant:
Salary: 30,000 - 35,000 depending on bonus
Employed as a junior project manager
Private tenant

Many thanks for reading through my long message!

cjv

There are loads of eligibility checkers online, not just on the MBNA website. Trying more of them will do no harm as they only do soft searches. It might be a good place to start, here are a few for you to try, you can google more

https://www.moneysavingexpert.com/eligibility/credit-cards/
https://uk.virginmoney.com/virgin/credit-cards/balance-transfer-cards/
https://www.money.co.uk/credit-cards/eligibility-checker.htm?table=14
https://www.uswitch.com/credit-cards/eligibility-checker/?category=most-popular

Many banks have their own eligibility checkers too on their websites.

Good luck!

gen789

Thanks cjv!

I've looked at all of those but was hoping to hear people's opinions on whether it's a good idea to be applying for a balance transfer now, or working to reduce my barclaycard balance first before I do.

Also wondering how accurate these eligibility checkers are, for example if it says 90% are you almost guaranteed to be accepted?

I also have no clue if a balance transfer of £5,000 is too much to ask for - as I said all the banks I spoke with were reluctant to give me any sort of indicative figures..

Thank you!

cjv

Hmm I am not too sure about how paying down the balance will effect your chances, I am still new to this credit card game too

I think it will be a positive move though, as it will reduce your credit utilisation assuming you wait for your account to be updated on your credit files before applying.

Remember though, you can use more than one card to transfer your target £5k, so you could possibly obtain 2 new cards with different providers and transfer £3k onto one card and £2k onto anther.

gen789

To be honest I would be prepared to sacafice a bigger part of my savings, but only if it I know for sure that it would improve my chances of being approved for a balance transfer.

I also don't want to be submitting too many credit card applications to avoid a drop in my credit rating.

Btw, I know that hard checks stay on your file for a while, but do you know how long it takes roughly before the score normalises again?

Thanks!

cjv

The thing with the credit scores is that they are only seen by you and the provider that makes them up, e.g. Experian, so they essentially mean nothing in regards to your credit worthiness as each lender will have their own criteria to judge you on.

If you have not applied for credit recently, then you should be fine to make a couple of full applications for credit cards. Take your time to do your homework on the offers available so you can get the best deal, use your eligibility checkers and then go for the cards you feel you have the best chance of getting to suit your needs.

Candyapple

You have £3k in savings and debt of £8k at 29% APR. For the love of Christ use ALL your savings to clear as much as you can off the debt!! :doh:

Have a read of below:
http://www.moneysavingexpert.com/savings/pay-off-debts

Once you've used your savings, your debt should now be circa £5k. You should wait at least 2-3 months for the balance to be updated and showing as such across all 3 credit reference agencies.

You obviously have some kind of adverse credit history if MBNA are turning you down, especially given your salary.

The free versions to check your credit files are below:
Experian: https://www.moneysavingexpert.com/creditclub
Call Credit: https://www.noddle.co.uk
Equifax: https://www.clearscore.com

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?

Are you on the electoral roll (does it show on all 3 files?)

Do you have many other 'credit' accounts showing on your files such as bank account / mobile phone etc.?

Have you made any credit applications in the last 12 months?

gen789

Hi Candyapple, thanks a lot for taking the time to respond!

The truth is I saved that money up in quite a short space of time, working pretty much non stop with an 8-5 job and also freelancing at night and on weekends (which I'll continue to do until everything is paid off). So I haven't really had the time to ask for some advice and figure out the best way to appropriate the money.

I went through a fairly long period of financial hardship after graduating in 2015, but I have since managed to get back on my feet. However, during that period I did have a few missed payments on my credit card and there was even a stage where I had to make an arrangement with Barclaycard to pay smaller instalments for a few months, and then it went back to normal. I've attached some screenshots of my experian report just to give you an idea. And as I mentioned, I also have a delinquent account with Santander due to a screw up on my part, where I neglected to give them my new address, and £2.75 of unarranged overdraft turned into £180 because I wasn't receiving statements, and by the time I found out about this it was already too late. I tried to dispute this with Santander but to be honest it was my own fault for not updating the address so I didn't get very far. The good thing is that it's no longer showing on my account as a negative because it's been about a year since the balance was settled.

I do have another 2 overdrafts - £1,000 with Barclays graduate account, interest free and £500 with NatWest and both of them are used up. I'm owed £2,000 by 2 close friends of mine, and even though they will come through eventually, it doesn't look it's going to be very soon.

And yes, you're correct about wishing to have an emergency fund available. My life isn't exactly where I need it to be at the moment, and I'm facing some degree of uncertainty whilst I'm also trying to make a lot of changes to turn things around financially- but luck hasn't always been on my side so it would be good to have some cash available. My parents work really hard and try their very best but they are not huge earners, so I would like to have some money available should they ever need any help from me. I also thought about putting some of the money towards buying equipment needed for my freelancing but it's not a top priority.

To be honest, the monthly instalments I'm paying into my credit card now are strenuous on my budget but at the same time they're not making me bankrupt, so I can live with them a while longer until I have a concrete plan in place.

So you don't think that 1 or 2 thousand would be enough to be accepted for a half decent deal on a balance transfer? I'm actually not even sure what kind of APR, interest-free period and handling fees I should be aiming for as I wouldn't want to be rejected going for the good deals, but I also wouldn't want to be sold a bad deal. How is one supposed to know what to apply for, how much balance transfer to request etc? Which banks should I be going to? How accurate/reliable are these eligibility checkers, and does 90% likelihood mean you're almost sure to get accepted- or do they just put a high number on there to entice you to apply? Also, if I happen to get rejected what kind of drop in credit score can I expect and how long before it recovers?

Please see the dropbox link below which contains some screenshots of parts of my experian report that might be relevant and will answer most of your questions.

dropbox.com/sh/8tkegl1ywh1kc8s/AACi5KRbnGXrf5yVSyzwIZLra?dl=0

Additionally, I am on the electoral roll, all my addresses are up to date, and I have not made any credit applications in the last 12 months.

Thanks again for taking the time to write me back, I really appreciate it!

Ben8282

gen789 wrote: »

I would be happy to pay some money to receive guidance with this from someone with more experience than me.

NO. NO. NO. DO NOT DO THIS.


I have read what you have written.
The offer that you have received from MBNA, although not the best offer available, is not all that bad really and would at least give you an 18 month break from interest for a fee of less than the equivalent of 2 months interest that you are currently paying.
Could you get better?
I don't know and nobody else knows either.
I am assuming that the Barclaycard is your only credit card, the credit limit is 8.5k, the balance is about 8k, this is your only debt and the Barclaycard account is in good standing.
From personal experience, I think that the high utilisation ratio could be a problem. 95% is very high and needs to be reduced as a matter of urgency. You say that you have 3k in savings but that you prefer to keep this money as an emergency reserve. Very sensible but wrong thinking. At the moment you are paying interest at an APR of 29%. What interest rate are you getting on these savings? A very small fraction of the interest that you are paying on the credit card to be sure. Now if you were to use ALL of this savings to reduce the balance of the Barclaycard, the funds would still be available within your credit limit to use again in an emergency. You would therefore instantly be saving about £70 (very approximate figure) each month in interest alone. If you did in an emergency need this money, you could just spend on the Barclaycard and start paying interest again on this amount of money. Either way, you will definitely save money.
This would also reduce the utilisation down to about 59% which is a lot more respectable than 95%.
One problem that you have, which hopefully will be rectified in the near future when you obtain a new card, is your low amount of available credit, both in general and in relation to income. This low amount of total available credit means that it is much more difficult to carry debt than someone with a much higher amount of available credit.
Once the balance is reduced do not make your new application immediately. If you have access to a credit report where the Barclaycard is reported, do not make any new application until you have seen the lower balance appear on the report. If you do not have such access, play it safe and wait at least two full calendar months.
I am hoping that you will be fortunate enough to get a credit limit which will enable you transfer the whole remaining balance. This is a realistic expectation given the current Barclaycard credit limit and the current amount of total available credit, but obviously not guaranteed. To an extent, the credit limit on the new card is far more important than the 0% period or fee. Even 6 months with a 3% fee on a card that that you could transfer the whole balance to would be better for you than 42 months at 0% fee on a card could only transfer a small fraction of the balance to.
Use various eligibility checkers to establish the sort of chance that you are getting for various cards. Make an honest assessment of the sort of card that you are getting the best chances of acceptance for in terms of 0% period and fee.
When you do apply don't go for the longest 0% period that you can find or the lowest fee; go for something at the lower end of the type of card that you are getting the best acceptance chances for.
And good luck with your application.
When you do get your new card and if you are fortunate enough to get a credit limit high enough to transfer everything, don't do anything silly like cancel or reduce the credit limit on the Barclaycard. Instead, continue to improve your credit rating by using the Barclaycard for purchases and repaying in full every month.
If by chance the 0% period that you accept is relatively short, after having fully repaid the Barclaycard you will in all probability find some reasonable existing customer offers coming up which will enable you to transfer the debt back to Barclaycard sometime in the future if the need should arise.
Lenders do like to see 0% balances repaid. Actually repaying them will do more good to get you longer 0% periods than endlessly transferring them.

Ben8282

I have just read your reply to Candyapple above.
Experience tells me that your expectation of your friends actually repaying you the 2k that they owe you may just be wishful thinking. In your place I really wouldn't count on seeing this money again.
Having read that you have overdrafts, normally I would change my advice to suggest that you repay the overdrafts first as being overdrawn looks bad. An amount of money owed as an overdraft looks much worse than an identical amount of money owed on a credit card. However at least one of these overdrafts is interest free. Because of this and also because the utilisation ratio of the credit card is so high, I will stick with my original advice in this instance and say repay the card not the overdrafts.
Your credit report looks ok from what I have seen of it. Nothing terrible there. I can see no reason why you should not be able to obtain a reasonably decent mainstream credit card but you really must reduce the balance.

BatchedMetting

gen789 wrote: »

I also have no clue if a balance transfer of £5,000 is too much to ask for - as I said all the banks I spoke with were reluctant to give me any sort of indicative figures.

I recently got a Virgin Credit Card to do a 0% balance transfer from another credit card.

When applying I entered my details and then they told me how much I could have (about £6.5k in my case). I don't think I ever had to ask for an amount - they just decided. Hope that helps!