Does having a credit card repayment plan affect credit score

Smithson27866992

Hello
We are trying to remortgage to clear all our debt and we have been refused.  I have a credit card repayment plan and they think this could be the problem?  What does anyone else think?  

[Deleted User]

It may or may not affect your score, but it definitely looks bad to lenders.  

It means you have no disposable income at all.

adamp87

Ignore your score no lender uses that - they look at your report & credit history.

Consider your position to a potential mortgage lender.

You have xx income.
You have ZX outcome - and on one of your credit accounts a repayment plan.

That suggests you have more outgoings than your income & you are unable to afford the debt.

Most likely this is why it was rejected. If you are in a repayment plan for one debt, what’s to say that won’t happen with the remortgage. 

Once that gets under control you might have better luck 

born_again

Remortgage to consolidate your debts is never really a good idea. As you are taking a unsecured debt & making it a secured one. Think what the worst case scenario is if you fail to make the payments. 

But being on a repayment plan will effect any further lending.

Ebe_Scrooge

Think about it logically.  What you're saying to the mortgage company is "I'm up to my eyeballs in debt, and I can't afford to even make the minimum repayments on that.  Oh, by the way, will you lend me some more money please?".  They have no guarantee that you'll use the money to repay your existing debt, they have to assume a worst-case scenario whereby you'll blow it all on expensive Champagne and be in double the debt you are now.

Consolidation loans are never the answer - you're merely shifting the debt from one place to another.  With the added danger that even if you do clear the cards with the loan, you'll simply rack up debt on the cards again.  Then bingo, you're in double the debt.  And moving an unsecured loan to a secured one is even worse - as born_again says, what will happen if you can't keep up the mortgage payments ?  At least you won't lose your house over just a credit card debt.

Your best bet is to head over the the Debt Free Wannabe board, post an SOA and see where you can make savings.

Dandytf

Depends how the credit card payment plan was applied.
Persistent Debt Rules -FCA have officially stated Credit Reports will not be affected it plan payments are maid on time, I have one -no info on reports to show any plan  which is in line with what FCA have said.
Though Non persistent debt repayment planes could have negative effect, if it were for arrears or serious late payments etc.

sourcrates

Smithson27866992 said:

Hello
We are trying to remortgage to clear all our debt and we have been refused.  I have a credit card repayment plan and they think this could be the problem?  What does anyone else think?  

If you already have an arrangement to pay on your credit file, it shows you are in financial trouble and so further borrowing is unlikely to be granted, which is the correct decision in this case.

If you have debts that are becoming unmanagable, please pop over to the DFW board and post up an SOA, we may be able to help you.