Loan and credit score

ArcherV

Hi all, I have a question.

November last year I had to get a loan to solve some things that came out of the blue with Barclays. This July for the same reasons I did a loan top up with them again. In October my rent went up quite a lot and now I struggle montly with bills and mostly the repayments rate I have for this loan. I would like to get a loan with a better apr and smaller monthly amount to close the existing one but I’m very worried my credit score will be ruined (it’s between good and excellent).

The question is, if I get a loan with someone else as Asda or Tesco bank to close the existing one (loan plus top up) will my credit score be affected?

TIA for the replies!

[Deleted User]

Your credit score is a fictional number that has no bearing on your credit worthiness. It may randomly go up, down or stay the same.

Your credit files will show the old loan being settled and a new one taken out. Each lender will have their own view on that.

ArcherV

So basically there is no way to know until I do it?

[Deleted User]

You just need to take a common sense view. Would lenders be concerned about you swapping one loan for another and not increasing your debt? Does it make you higher risk?

The answer would generally be no.

ArcherV

I never fully understood that as in Italy, where I come from, there is anything like this credit score thing. I only understood in these years that if you repay without problems it builds up.
So, If I basically ask one of the same amount to close the other am I a lower risk? The fact that I took one one year ago and top it up (this closed the previous one) 4 months and now get a new one to close that will not affect that?
Gosh sorry, I’m very slow on these matters

[Deleted User]

Essentially, it's going to make little difference.

To really improve how lenders see you, reduce your debt as quickly as you can. Always ignore the scores, as they are not used by lenders and they react incorrectly to changes.

Do note, however, that as you already have a loan, you're asking to double the amount when you apply for a second loan, which makes it less likely you'll be accepted.

You may intend to pay off the first, but lenders cannot be sure of that and will have to assume that you will spend the lot on Inter Milan merchandise and then have twice as much debt.

ArcherV

I see what you mean! So they have to trust first, if they do and the second loan is used as debt consolidation it will not change much.

Thanks!