should my credit be so poor

pickedliver

eskbanker wrote: »

OP has posted a full SOA on the debt-free board, stating monthly net income of £3,689, suggesting annual gross in £60Kish territory, but also an eye-watering amount of total household debt that will inevitably be affecting overall affordability in the context of the contribution from a low-income wife:

https://forums.moneysavingexpert.com/discussion/comment/76653329#Comment_76653329

Yes that's right, we have a take home pay of £4956 combined and we have debts of around £64k.

I would just like to stress that I didn't post here looking for sympathy or reassurance. I totally agree that our debts are out of hand. If you read my post of the DFW board you will see how concerned I am . Despite this, I am also positive and optimistic that with some sensible budgeting and better choices we can make a real difference to our debt relatively quickly.

hopefully my credit worthiness will improve each month as I continue to reduce the balances!

SnowTiger

pickedliver wrote: »

Perhaps I should be in the poor category, I just wasn't really sure how it worked. I suppose I thought that as I pay on time etc that I might better than poor. As others have said, I am not too worried about the actual score, more the impact of it on getting 0% deals etc.

I think £40,000 is a lot of debt.

Are you reducing it?

Others here have found out that eventually the 0% deals run out.

pickedliver

SnowTiger wrote: »

I think £40,000 is a lot of debt.

Are you reducing it?

Others here have found out that eventually the 0% deals run out.

Hi,

Yes, we have a plan in place now and whilst it won't happen overnight, we can pay this off without having to go down a formal debt management route. Thankfully out mortgage and other outgoings aren't too bad so we are able to make significant over payments. Just got to knuckle down. I am trying to keep calm and not allow it to get me down too much.

midlander81

Not sure if all of these comments are that helpful to the OP. Surely debt is relative to income?

I think that everyone would agree that a combined debt of £60k is a lot of money, however the OP and his partner are taking home nearly 5K per month between them with monthly debt payments of £1519 so ratio of about 30%. This is the same as someone earning £1400 per month ( about 20K annualy) paying out £420 per month. I have seen lots of people on the DFW board with much worse debt to income ratios compared to the OP's.

yksi

The short answer is that despite you being responsible and handling your debts well, you are not a good bet for a lender - they have oodles of data from people in a similar situation and it's very common for "similar profiles" to yours, to default.

I think the reason you were surprised at being rated poor was that you thought you're doing ok handing things - that might be true but that's not the entirety of how you are assessed. Lenders see you as being in a high repayment stress situation and are reluctant to take any more risks on you. Although the score is not definitive (because lenders don't see it), take this as a big red flag that 0% deals might not be there for you in future, and concentrate on dramatically curtailing your spending.

pickedliver

Thank you for all of the posts. Much appreciated.

Out of interest, how to the CRA's verify my income? I think I had to add it when I signed up,but I could have put any figure in.

Nebulous2

pickedliver wrote: »

I earn around 65K and my wife 18.5K. Our total household debt is over 60K so we are definitely at an unhealthy ratio. Thankfully we have a smallish mortgage so we are in a position to fix it.

I just had a look at your other thread and it looks fixable, given the income you have. Congratulations on addressing it in time. There’s a long haul ahead, but good luck with it.

Check out this thread for some inspiration.

https://forums.moneysavingexpert.com/discussion/5567669/unsure-whether-to-consolidate-please-advise

[Deleted User]

pickedliver wrote: »

Out of interest, how to the CRA's verify my income? I think I had to add it when I signed up,but I could have put any figure in.

They don't. Lenders will ask for confirmation if they gave doubts.

pickedliver

Nebulous2 wrote: »

I just had a look at your other thread and it looks fixable, given the income you have. Congratulations on addressing it in time. There’s a long haul ahead, but good luck with it.

Check out this thread for some inspiration.

https://forums.moneysavingexpert.com/discussion/5567669/unsure-whether-to-consolidate-please-advise

Thank you. Possibly not too long haul though, If we continue to get our acts together we could get it all paid off within 3 years.