Advise Needed - Credit building

FlossyFloss

Hi All - This is my first post here.
As per a lot of people I have been inspired this year to sort out my finances. I am pleased to say that 16 days into the new year I have already managed to pay off my Halifax overdraft. I am now however left with £4k of debt.
£2,500 is credit cards and the rest is store cards.
I have a decent salary coming in and I manage to pay £150 a week off of my debt - although I feel like I'm just paying off interest.
I recently looked at getting a 0% card or a loan as I thought this would be the easiest way to clear it quickly. When doing the eligibility check - I can only get loans with over 59% APR and the same with a credit card.
In the next few months - I am also looking at trying to get a mortgage with my partner - who has the most perfect credit score!
Do you have any advise as to how to clear my debts quickly? Am I doing it the right way? Will this also improve my credit score?
Thanks so much for all your help!

Willing2Learn

FlossyFloss wrote: »

...I am pleased to say that 16 days into the new year I have already managed to pay off my Halifax overdraft...

Well done :T

FlossyFloss wrote: »

...I am now however left with £4k of debt. £2,500 is credit cards and the rest is store cards...

FlossyFloss wrote: »

...Do you have any advice as to how to clear my debts quickly?...

Google how to snowball those debts. To reduce interest paid, I suggest you apply for a 0% Balance Transfer or 0% Money Transfer card.


Also, ignore your credit score, as lenders neither see it nor use it. Lenders score you against their own criteria and policies using the data held in your credit files added to the data you submit in a credit application

Edit: And welcome to the forum

EssexHebridean

FlossyFloss wrote: »

I thought this would be the easiest way to clear it quickly.

It wouldn't though, would it - it would just relocate it to somewhere new. I get that this seems picky, especially when the advise for you to think about a 0% balance transfer card is really good, solid advice, but it's important that people understand the mindset that is needed to get shot of debt, and to get shot of it for good. It's the reason we always urge people to re-think consolidation - it's moving the problem away from the immediate, and often slows down the process of actually paying it off.

First step here is to put together your SOA - Statement of Affairs - and then to get a working budget in place. Live with that for a few months, making sure it works for you. You'll find some stuff you can trim down a bit, other areas you may have underestimated - that's all part of the process. That will also tell you how much you can afford to pay off the debt. The Snowball method is great - the idea being you pay them off in interest rate order, so the debts that cost you the most are gone sooner than those costing you less - ultimately this of course means paying less in interest.

The link to the SOA calculator is in my signature - have a go, make sure it's honest and accurate, and if you want to post it in here we'll be happy to take a look over and suggest any savings you might be able to make.

FlossyFloss

Hi - Thanks for your replies.
I have tried to get a balance transfer card - but I never seem to be accepted.
I will try the snow ball effect and keep paying off weekly.
Hopefully by doing this - this will build up my credit score.

Craig1981

watch out for too many credit applications prior to a mortgage application as well

getmore4less

Great start but...

[STRIKE]Even if all your debt was 0% with £150pm that is over 2 years to clear £4k[/STRIKE]

You are going to need to earn more or find savings if you want to clear it quicker than that.

you need to do a SOA and find out where all you money is going.

http://www.stoozing.com/calculator/soa.php


woops

I see it is £150 per week that will help a lot(£650pm)

£4000/(£150*52/12) = 6.15 months

Even with an average rate of 20% you will have this paid off in 7 months paying £257 in interest.

A list of debts and the interest rates will help decide the best route to paying this off.

depending on that list, and your spending a 0% spend card(they have no fees) may be better than BT card with fees.

You can use this for all normal spends and use your cash to snowball your debts effectively transfering them to 0% with no fees.

You could move it a lot quicker if you used the card to pay for some of the OH bills and they give you the cash.


Even the use of a CC that you pay off in full will help as you get the 0% free period

Kitten868

Stop applying for credit. That will look really bad when you apply for a mortgage.

Keep paying it down as you're doing so well. I'm guessing you should pay more on the store cards as they'll be accruing the most interest. Also pay off the smaller debts as then you close the credit accounts you'll have fewer creditors. In regards the mortgage all that should happen is that your amount available will be reduced by your debt. So say they would lend you £100k. It would reduce to £96k.

AliceBanned

You may not be getting promotional offers because of poor credit history. Have you only recently started paying the debts down? If this is the case things should quickly improve if you are repaying around £600pm. Keep checking on Clearscore or MSE Credit Club for an idea of eligibility but don't apply for too many cards if you want a mortgage soon.


Lenders calculate what you can borrow on a mortgage based partly on your monthly outgoings includng those cards, assuming a repayment rate of 3-5% per month.


Snowball calculator is great if a bit clunky to use but it has helped me prioritise my debtsand then get in a better position and get 0% offers:
http://www.whatsthecost.com/

easterbunni

If you are applying for a mortgage in a few months then you must have a deposit? Use that to pay off your debts and then throw everything at the deposit again.