Credit card holiday and credit score

mummamia42

This is about my son. He previously had a bad credit score having made some silly mistakes with payday loans in the past. Over last two years he had been working and had built his credit score up. He’s now lost his job and has a couple of credit cards with vanquis and aqua. Both were close to their limits ( both under £1500) but he was paying them each month. He applied for payment holidays with both of them but because they are adding interest it’s taken one over the credit limit and he’s being harassed to pay. He’s explained his circumstances but they have advised he has to either bring the card under the credit limit again or they can freeze the debt and he can agree to pay £1 a month.The trouble is This will effect his credit score. He’s not working still And can’t afford to pay anything, though I’m 
sure he could manage £1 a month Surely this is against the spirit of the payment holiday? Shouldn’t they offer other options like increasing the limit ? Does anyone know if exception will be given by credit reference agencies if he does have to go down the £1 a month option. 

bradders1983

If he isnt working, and on the limit on credit cards, may I politely suggest he has bigger worries than what a pretty number that means nothing looks like.

hb2

All the companies offering credit have to look at the individual's situation before offering payment holidays - they are not allowed to offer (further) holidays if that would lead to an unmanageable level of debt for the borrower. I'm afraid it looks as if this is the situation your son is in.

Payment 'holiday's will appear on credit records - but it might not make a huge difference as many people are having to take them at the moment. I don't know what the situation is with payment plans - such as the £1 per month offered (which sounds like a very fair offer to me!) - but suspect this will also show on the record.

mummamia42

He’s not working because of coronavirus. It seems unfair that after working to repair a past mistake he’s going to end up in the same mess and struggle to get future credit 

onwards&upwards

It might be better for him to have a poor credit score, because it sounds like he struggles to manage credit and it would probably be better for him to have to learn to manage his money without having access to any. 

When using cards like Vanquis and Aqua to build up a poor credit history, the idea is to make smaller purchases on them and then pay in full each month, not to rack them up to near the limit, make minimum payments and incur lots of interest at a high rate. 

Get him to post on the debt free wannabe forum here, best place for the advice he needs and lots of friendly and knowledgeable folk who will want to help. 

poppy12345

Vanquis have an insane APR rate at 39.9% and the interest will continue to increase each month. Not sure what they can do about that to be honest. If he doesn't pay then yes it will continue to increase.

mummamia42

I should point out that he was paying them off each month before he lost his job and that the limits on each card were very low but he has literally no income now 

sharpe106

Don't worry about credit score it means very little it is basically a gimmick to sell people things. If it meant anything all the companies would have the same scores. 

If he can't afford to pay any more then the £1 a month is fair. 

Time2Go_25

mummamia42 said:

I should point out that he was paying them off each month before he lost his job and that the limits on each card were very low but he has literally no income now 

Sorry to sound a bit harsh, but he hasn't learnt from his previous mistake as he's allowed 2 expensive credit cards to get close to their £1500 limit and although he was paying them off he must have been incurring a large amount of interest each month. As others have said if you are using these cards to repair your credit history then they really need to be paid off in full each month. it would probably be best to just pay off the minimum he can each month and not worry about his ability to get credit in the near future.