Pay off the credit cards with loan.

Henivida

Hi there, 

I’ve been trying to understand how’s the credit score working. I find it hard to follow it. But my situation is; I’ve got 3 credit card in a debt credit agency. I’m paying those monthly but I got loads of missed payments. I’ve got a loan which is always up to date! And my phone bill which is got worst due to Covid-19. 

Soon we are planning to move to Maidstone, and for the annual train ticket I need to take a loan out yes or yes. With my already made loan I can easily top it up and I don’t need to take another new loan. Which is great.

My question is would it be worth to take a bigger loan out (the top up what I’ve mentioned) and pay all the credit cards and phone bill out and just pay that one loan? So it will look better in my credit report when we decide to get a mortgage for the house? Because if I ain’t do that I will have to pay the loan, the credit cards (which are cancelled) and the phone bill. Which’s looks pretty bad right now. With a bigger loan I could get rid of all of those and leave only the loan. Which is can be easily handled. Also would it affect my credit score less only that one loan than if I have those credit cards and etc.

Thanks a lot! 

[Deleted User]

It'll make little difference to now lenders view you as the debt remains the same.

Don't try to change the score, which doesn't matter, but aim to reduce your debt, which does.

sourcrates

The first line of your post does suggests this is not a great idea -

"I`ve got 3 credit card in a debt credit agency. I’m paying those monthly but I got loads of missed payments"

I assume you mean Debt collection agency, consolodation of existing debt is rarely a good idea, lenders have tightened up their lending criteria due to covid-19, I`m assuming your current loan has a top up facility, but that will definetly be subject to a credit check.

You may find your lender will not sanction any further borrowing, due to your bad debts, and please don`t tell me its a guarentor loan you have.

MinuteNoodles

You can't afford to move, you can't afford a loan, you can't afford more borrowing, you can't afford a season train ticket.

You are skint, you are broke. You can't even afford your current financial commitments because you're failing to repay your debt plan so given you can't even pay that you can't afford more borrowing. You most certainly can't afford a mortgage not that anyone will give you one.

As it is at the moment technically you're bankrupt. Yes, that's right. Bankrupt. You cannot service the debt you currently have, you have no assets to cover that debt.

Henivida

MinuteNoodles said:

You can't afford to move, you can't afford a loan, you can't afford more borrowing, you can't afford a season train ticket.

You are skint, you are broke. You can't even afford your current financial commitments because you're failing to repay your debt plan so given you can't even pay that you can't afford more borrowing. You most certainly can't afford a mortgage not that anyone will give you one.

As it is at the moment technically you're bankrupt. Yes, that's right. Bankrupt. You cannot service the debt you currently have, you have no assets to cover that debt.

They are offered us a mortgage already. And yes I can top up my loan because they offered me already. People are using loans to pay off their credit cards. 

The credit cards are up to date only the lockdown period was bad. Since I’m working they are all up to date, but I wanna get rid off them. 

Also, I must move, not because I want we must move and I can’t leave the job as nursery manager so I do need the annual ticket to travel here at least for the following year. 

Thanks for the “advice”. 

[Deleted User]

The "advice" is sound, I suspect you have been offered a mortgage in principle? they will do checks later on and often a second lot of checks as well, you have missed payments and even have a phone bill you cannot afford, you are in serious financial difficult.

MovingForwards

You are trying to get additional credit (a bigger loan) to pay debts off when you have a mortgage offer, before you have completed and have the keys in your hand?

If that's what you mean, you are at risk of having your mortgage offer withdrawn.

foxy-stoat

You cannot borrow your way out of debt.  Post up your credit card balances/limits/interest, loan balance and interest, phone bill outstanding amount and how many missed payments in the last 12/24/236 months.

At a guess you wont be able to borrow enough to repay all your outstanding debt plus enough for a season ticket.  Why not use the 5/10/15% cash you have as a deposit, plus the £1500 or so cash you must have for legal/buying fees and the other £500-£1000 cash you must also have for moving costs you for your new house and clear your unsecured debt and start again.

goldieandblackie

This is just one reason they should teach money management in schools.

RyanHello

goldieandblackie said:

This is just one reason they should teach money management in schools.

Even if they did, there would be still be a lot of people utterly useless with money. We've all seen the people on here who get into debt, pay it off and then get into debt AGAIN a few years later. It's like a crash diet, there is no helping anyone.

The only thing that needs to be taught at school is Maths, English and common sense. Everything else falls into place later on.

MalMonroe

MinuteNoodles said:

You can't afford to move, you can't afford a loan, you can't afford more borrowing, you can't afford a season train ticket.

You are skint, you are broke. You can't even afford your current financial commitments because you're failing to repay your debt plan so given you can't even pay that you can't afford more borrowing. You most certainly can't afford a mortgage not that anyone will give you one.

As it is at the moment technically you're bankrupt. Yes, that's right. Bankrupt. You cannot service the debt you currently have, you have no assets to cover that debt.

I absolutely love this comment, and I'm not being sarcastic. It says everything, just as it is. 

And I agree with every word. Thank you, MinuteNoodles.