Difficult to get out of debt

Britkeys

Hi
I wonder if anyone can help me. I currently have a £60k mortgage on £350k house, no other loans and 2 credit cards. One card I always pay off in full (mainly used for various expenses as I work away from home during the week) and has a credit limit of £2500, the other I have a balance on every month and is nearly full with £8500k out £8750 limit.

I have an exemplary payment history on anything I have had with no missed payments in 30 years including CCs and mortgage.

Unfortunately, I have a CCJ. This I only found out about 18months ago when I got a copy of my Experian credit report. It was for an unpaid parking fine which I also didn't know anything about. I was already 2 years old then and is for the princely sum of £165. No one has ever tried to collect the debt. At the time my credit rating was still quite high though even with a 2-year-old CCJ.

I have just checked my Experian report to find it is "poor" and they raise 2 amber warnings:
1. the CCJ - ok I have it but it is now 3.5 years old and is for £165. Also, my rating was ok 18 months ago even with it.
2. I am using up a lot of my credit on the CCs. But that is £11250 plus £60k mortgage based on around £300k equity.
Anyway, I wanted to consolidate my card debt and extend the mortgage by £10k (to have an emergency fund also). Unfortunately, I have no savings now as we lost some money on a scam and most savings are inaccessible in my pension. I also have been hit with a large tax bill which I am paying in instalments - so I want to get rid of the CC debts and reduce my monthly outgoings.
Santander is refusing any extension because their policy is to refuse anyone with a CCJ. I also cannot get an ordinary loan because I have a poor credit rating - even though the loan is to pay off the debt. I am not going to use a high-cost loan shark.
So what can I do? Why is my credit rating a Poor on just these things and how can I pay off the CCs with a smaller more controllable finance of some kind? I can't even get a new CC transfer deal because of the CCJ and rating.
Sorry for the long post but I am amazed I have got into this situation and I can't see the justification for my bank of 30 years refusing me!
Thanks in advance.

DCFC79

No lender can see your credit rating, they see your credit history.

Sounds like you need to cut your spending so any savings you make you can put towards the debts. Maybe a trip to the dfw board is needed.

Britkeys

Very difficult to cut what we don't spend. This month we have around £1000 in back tax, £1000 of DDs (mortgage, phones, gas/electric, council tax, etc), £500 food and general expenses incl. petrol, £1400 CC bills (pay off one card and the minimum payment of the other) and we also have car insurance this month - £350. So £4250 of which very little is easily cut. And I am not even reducing the standing balance much on the CC.
I take home around £4200 p/m but have to pay for living away in the week.
It is a catch 22 with applying for credit because if you fail it just gets even worse. If Experian mark me as low then surely lenders would also or I have to pay higher rates than the CC.
Santander (my bank for over 30 years from Girobank) refused based just on the CCJ to make a small extension on the mortgage. I was discusted frankly and they have lost good business.

[Deleted User]

As already suggested, ask on the dfw forum. Post a statement of affairs and you'll be surprised what can be cut from your outgoings once your affairs have been looked at independently. what strikes me straight away is your car insurance seems very high, that's one I would be looking to change by going to comparison sites.

DCFC79

The dfw board

http://forums.moneysavingexpert.com/forumdisplay.php?f=76

gycraig_2

Definitely dfw board if you are having money problems on 4200 a month you are overspending somewhere

Britkeys

Thanks and I will have a look but .... the big expenses are £1000 a month back taxes which I am paying until January - nothing I can do about this and 1400 cc bills.

But my real question was about why my credit rating is so bad when I have exemplary repayment history and only the tiny and old CCJ plus currently a full card. But no arrears. The argument that I am using most of my credit is irrelevant as it surely depends on your income on whether you can afford it. If I only had a 100 credit card but used it all then would that make me a large credit risk? Not if I earnt 1000.

takman

Britkeys wrote: »

Thanks and I will have a look but .... the big expenses are £1000 a month back taxes which I am paying until January - nothing I can do about this and 1400 cc bills.

But my real question was about why my credit rating is so bad when I have exemplary repayment history and only the tiny and old CCJ plus currently a full card. But no arrears. The argument that I am using most of my credit is irrelevant as it surely depends on your income on whether you can afford it. If I only had a 100 credit card but used it all then would that make me a large credit risk? Not if I earnt 1000.

Using most of your available credit is certainly not irrelevant. This is a big factor when it comes to getting new credit. Someone who uses every penny of available credit is very likely to be struggling with money, especially if your paying interest on the balance. Which in your case is true because you spend every penny you have each month, have a maxed out credit card and no savings. So you are very high risk to lend to because you don't have any spare money to pay off any additional credit.

Britkeys wrote: »

Very difficult to cut what we don't spend. This month we have around £1000 in back tax, £1000 of DDs (mortgage, phones, gas/electric, council tax, etc), £500 food and general expenses incl. petrol, £1400 CC bills (pay off one card and the minimum payment of the other) and we also have car insurance this month - £350. So £4250 of which very little is easily cut.

You say you have £1500 a month which is spend on the Mortgage, bills, food and general expenses. You need to break this down into exactly what you spend on each thing and see if you can get it any cheaper.
You need to look at when was the last time you switched energy providers, are you getting the best deal on your mobile phone, can you cut your spending on food. What exactly are "general expenses" are these required and can you save money on them.

You also say you pay off the minimum payment on one of your cards, this is also a big red flag to lenders combined with it being near the limit. So the first thing you should do is set it at a fixed amount which is above the minimum payment which you can afford. (even if its only £1 above the minimum payment this will look far better on your credit report as it won't be reported as minimum).

You also say alot of that £1400 is to pay another credit card off in full each month. What exactly are you spending on this card each and can this be cut down?.

cjmillsnun

Britkeys wrote: »

Thanks and I will have a look but .... the big expenses are £1000 a month back taxes which I am paying until January - nothing I can do about this and 1400 cc bills.

But my real question was about why my credit rating is so bad when I have exemplary repayment history and only the tiny and old CCJ plus currently a full card. But no arrears. The argument that I am using most of my credit is irrelevant as it surely depends on your income on whether you can afford it. If I only had a 100 credit card but used it all then would that make me a large credit risk? Not if I earnt 1000.

So from what I can see you have two choices. Cut your spending now and reduce debt (it can be done - most people can trim some fat off their bills and food shop) and then blitz your debts in January.

or muddle through till January and blitz the maxed out card with the 1000/month you suddenly have available (so this before you start spending it).

The CCJ is a pain, however paying it will have it marked satisfied. This will make a difference with lenders in the future. Had you only a month to go before it dropped off I would've said don't bother, but with 2 and a half years, it is worth satisfying it.

You really need to do an SOA you can work out where every penny goes. You'll be in for a few surprises!.