Pay the loan off before applying for another loan?

David2018

Hi guys,

I have a question. I have a sofa on credit which is in its third (second last) year. In few months I will need to apply for a larger loan, with the same lender or others. Do you think it is better to pay off the remainder of sofa loan before applying for the large loan? Will this increase the chance or maximum amount of next loan?

Thank you in advance.

[Deleted User]

Carrying debt will reduce the chance of further borrowing.

Willing2Learn

How much will the new loan be and what is the loan for?

David2018

As much as possible if I will need it, it is not clear yet, it is going to be for health reason, for my sister in my home country.

David2018

£20,000 or more.

Willing2Learn

The eligibility and size of any potential loan, will all depend on your overall debt level, income and history of managing your credit accounts. Do you have a good credit history? No late payments, arrears, defaults, that sort of thing...

David2018

So, you too think that it is better to pay the existing loan off before applying for a large loan?

David2018

How many months before applying for another loan do you think it is best to pay of the existing loan?

[Deleted User]

As many as possible.

Willing2Learn

I don't think that makes too much difference. I believe it is all about how you have managed your credit accounts historically, whether you have a patchy history, whether you pass any affordability test...

David2018

Willing2Learn, it is my first loan. I have two credit cards, first for 2 years, second for 5 months, I use both of them and pay the balance in full. I have no other credit history except bills, including phone and internet bills. I have no late payments or defaults.