Debt advice please?

Youolddog

"You need to check the data on all your CRA files - as a lender would do."

zx81 - Is this the sort of thing Experian do? Like MSE credit club? In which case I've signed up to the credit club. I had an experian account for 4 years...a little dense but it took me that long to realise it was an expensive waste of money.

Court data
There are no County Court Judgments (CCJs) or bankruptcies on your Experian Credit Report.

Missed payments
You have no missed payments – well done.

Debt to income ratio
Your debts are a relatively low proportion of your annual income, so you're in good shape. Lenders are likely to be confident in your ability to repay them if they lend to you.

Credit utilisation
You're using quite a low proportion of the credit available to you. This is usually good, as lenders are likely to be reasonably confident you'd be able to pay them back if they lent to you.

Credit applications
Too many credit applications in a short space of time can make it look like you're desperate for cash. You've made a few applications in the past six months. You may want to wait until some of these are a bit less recent before making any more applications. Applications are usually wiped off your report after a year.

(Do note using Credit Club is not the same as applying for a product. We use a soft search - even though you will see it on your report, lenders usually don't – and where they do they can't use it - so it doesn't impact your ability to get credit.)

Account stability
The average length of your financial relationships is less than six years. Remember, this isn’t just bank accounts, mortgages, loans and credit cards, it can include utilities, mobile phone contracts, broadband and more.

Stability is attractive to lenders, but it's a minor point, and on its own is unlikely to scupper your acceptance chances. So don't be too scared of switching if there are better deals out there. That's the point of having a good credit score – it enables you to apply for better and cheaper products.

Residential status
You're not a homeowner. Renters and those living with parents are seen as slightly more risky to lend to than homeowners. It's unlikely this alone will sink your chances, but it could be the straw that breaks the camel's back. Obviously there isn't a quick fix, so concentrate on ensuring the rest of your credit profile is good.

Employment status
You have an income, whether that's from a job or a pension. Lenders want you to be able to pay them back, so a secure income is important.

I'm on the electoral roll.

Is any of this useful?

Kitten868

Posters on here are trying to help. It is true there's no universal score but there is an obvious principle that if you've proven you are poor with money - defaults and too much borrowing in comparison to income then most lenders don't want to touch you. Banks tell you to check your credit reference to check there aren't any defaults or lines of credit you weren't aware of. There are plenty of people who weren't charged their last sofa payment or mobile phone bill and have no idea it's on there. Some lenders actually prefer customers that have had charges or have paid out lots in interest as they want that money from you too. They aren't typically the lenders you want to borrow from but shows you that different lenders read credit files different ways.

I have never been self employed or know how you manage your income so I'm not great for advice. Do you know how much you've got coming in over your quiet period? Are you already all booked in or is it ad hoc? You can always try and cut your cloth according to the budget for this month? Try and make a 'survival plan' as it were. Or will there be nothing coming in? If possible I would hold off on the loan and scrape by - you said you haven't utilised all of your available credit? Could you ask extended family to chip in for their share of the holiday?

D_M_E

The £105 a month for haircuts - this is £1260 per year.

Is this correct?

Youolddog

D_M_E - eagle eye! No, that was annual. Amended.

Youolddog

Kitten - not sure what you mean, posters on here are helping me.

Being self employed is like being your own king, and being everyone’s servant all at the same time! Phone rings and you either think, “great, someone needs me!” Or “after working for them for several years, you’d think they knew to book me prior to Christmas Eve...”

Income is really tough to call. In the past 3 years:

Nov - 2500, 2400, 1200
Dec - 4300, 3300, 4400
Jan - 3000, 1900, 1800
Feb - 2300, 3400, 2200
Mar - 3200, 2200, 3200 - (2200 had no Easter dates, like upcoming year)

So, could be anywhere between 10700 and 16500. That’s a big discrepancy. I can tell you now that Nov is around 450 currently. Might push £1000 if I’m lucky. And Christmas is almost full, which is bad because last minute bookings almost never come earlier than 23rd dec. Currently on 2000 there.

I’ve been doing this full time for 4 years now, never mad less than 40k, usually around 41-42k. But last winter was poor, it took us until Apr to push the account into the black. Then a bumper summer was hurt by a large credit card bill and a broken car. I’ve got 1400 in the bank. Paying off credit cards in large chunks isn’t going to happen, not soon enough anyway.

We usually severely reduce spending Jan-mar. My parents give me a rental grace period, that saves 1700. But even that isn’t going to help us this time around. The available credit is on credit cards at 24%...which is what the 4000 in apr will jump to, so that’s fairly useless. Holiday - my MiL has already chipped in. It was her 70th birthday present...my parents’ 40th anniversary and a surprise for the kids. It’s coming down to “well, breakfast is included, but looks like peanut Butter sandwiches for lunch and dinner for 10 days!”

Frankly, I’m ashamed it’s come to this.

DCFC79

For the barren months take on a temporary job.


Its not clear if your the only earner, is that the case ?

Youolddog

DCFC79 - my wife has a part time job, works around the children (6,4,2). But I earn the main chunk.

I work an average of 55hpw. In busy months that's about 80-90hpw. In quiet months that's 20.

Trouble with the quiet months is that I still work daily, just for 2-3 hours. Then it's half term and I'm back up to 50 hours for a week, and then back down to 20 again. Usually between 7-9 am and 5-7pm. The extra work would have to fit squarely in the middle...i don't know if I could make it fit. I also don't know if I'll have the energy, those quiet months are my "days off", if you like. I haven't had a day off since Jan 2016.

enthusiasticsaver

I don't think taking another loan out is a good idea. As Pixie says you cannot borrow your way out of debt.

Presumably your issue is that you are not saving in the good months of the year to cover your low income months which is a common problem with self employment. I hope you have sorted out the tax side of your business as frankly a large tax bill on top of your debts is the last thing you need. Do you have an accountant?

Ideally you would be looking to cut costs rather than borrow more as this is how you have got into a mess. The groceries could be reduced if you shopped at Lidls or Aldi's and meal planned. The car would have been better left until next June rather than doing it now with no savings and low income and the same goes for holidays. These things need to be planned and saved for or not bought.

As others have said the credit agencies score is irrelevant. You will be a poor risk as you are over committed, self employed so no guaranteed income and not a home owner. The rate you get offered will reflect that which is why borrowing more should not be an option coupled with the fact you already have over £1k per month to pay out in debt commitments. Adding another debt into the mix makes it worse so some tough decisions need to be made. Ask your family to chip in for the holiday and cancel the car order would be my advice.

[Deleted User]

enthusiasticsaver wrote: »

I don't think taking another loan out is a good idea. As Pixie says you cannot borrow your way out of debt.

Presumably your issue is that you are not saving in the good months of the year to cover your low income months which is a common problem with self employment. I hope you have sorted out the tax side of your business as frankly a large tax bill on top of your debts is the last thing you need. Do you have an accountant?

Ideally you would be looking to cut costs rather than borrow more as this is how you have got into a mess. The groceries could be reduced if you shopped at Lidls or Aldi's and meal planned. The car would have been better left until next June rather than doing it now with no savings and low income and the same goes for holidays. These things need to be planned and saved for or not bought.

As others have said the credit agencies score is irrelevant. You will be a poor risk as you are over committed, self employed so no guaranteed income and not a home owner. The rate you get offered will reflect that which is why borrowing more should not be an option coupled with the fact you already have over £1k per month to pay out in debt commitments. Adding another debt into the mix makes it worse so some tough decisions need to be made. Ask your family to chip in for the holiday and cancel the car order would be my advice.

Spot on.


This has to be prioritised to feature in the weekly outgoings.
Definately a rule to live by for the self employed.


As self employed myself i set up payments weekly and make these top priority, otherwise it could become too easy to just dip into it here and there for the odds and sods that crop up unexpectedly.

Youolddog

My thanks for your time and advice folks.