I cannot raise my credit score to get accepted for a loan?

Benc98

All of last year I was unemployed and was getting further and further into debt, I didn't really miss many payments though, the odd late charge but it for paid back ASAP. My credit rating has taken a hit down to very poor tier. But I found a job at the start of December, and started paying my debts off, I paid everything off in large amounts until I had "affordable debt left" I paid off somethings completely like a high interest card and such, but everything else I got it to a balance of around 40% of the credit used and 60% available. But now I'm looking at buying a car, my job is secure for minimum a year unless I do something to get me terminated, so I was looking at getting a loan, but I can't get accepted because even though I'm no longer in debt that I'm struggling to pay off each month, I'm now paying more than the minimum amount, and not many months I'll have everything paid off. But my credit rating isn't going up? Every month it seems to keep going down by little amounts and I'm not sure exactly why.. 

MaryNB

Ignore the credit score. Only you and the agency see it. Lenders will only look at the data in your file and will have their own internal scoring system that you are not privy to. Each lender has their own criteria and assessments and they will not be the same as the CRAs. Keep paying off your debts. Avoid your overdraft, don't touch pay day loans, make sure all payments are covered by DD so you don't miss anything. With time lenders will be more amenable to you.

The data on your credit files is important. Keep an eye on all three, make sure there are no other negative factors you are not aware of. A lender may look at one or all three of them.

• Experian - use MSE credit club for free access
• Equifax - use Clearscore for free access
• Transunion - use Credit Karma for free access

Ebe_Scrooge

As MaryNB says, your score is absolutely meaningless, ignore it, it's the data in your history that matters.  From what you've described, I would surmise that your credit history is less than perfect.

"I didn't really miss many payments though, the odd late charge" - missed/late payments will be recorded on your file and will be taken into consideration by any lender viewing your files.

"I'm now paying more than the minimum amount" - if you're not clearing your credit cards in full every month, that's another red flag that you're struggling to service your existing debt, so it's understandable that people would be reluctant to advance you further credit.

Sorry, this is not meant to be "preaching" - just a factual assessment of how a lender would view you.  You may need to re-assess your need for a car, or spend a lot less than you were planning on in order to buy a cheaper runabout.  What kind of price bracket were you looking at for your car?

Benc98

Thanks! I haven't got an overdraft and I don't think I will again it's what kickstarted my debt in the first place, and I've never touched a payday loan, if I did I know that'd kind of be the end for me at that point, I'm only 22 so I'm trying everything I can to try and scramble completely out of debt like credit cards and such, whilst also giving myself enough money to travel to work, pay for food etc.

The loan I'd get would just be for a car and then that'd be the only debt to my name as I'd take a little bit extra than I needed for a car to completely pay my cards off, as I've already cut them up, I don't have access to them anymore. I can survive without a car for a while but it'd just make my life so much easier. 

[Deleted User]

Benc98 said:

I can survive without a car for a while but it'd just make my life so much easier. 

In that case, simply put the money you would have been wasting on the loan towards paying off your cards. Once you're debt free, you'll be able throw your disposable income into your savings and hopefully avoid the need for further borrowing at all. 

[Deleted User]

Benc98 said:

Thanks! I haven't got an overdraft and I don't think I will again it's what kickstarted my debt in the first place, and I've never touched a payday loan, if I did I know that'd kind of be the end for me at that point, I'm only 22 so I'm trying everything I can to try and scramble completely out of debt like credit cards and such, whilst also giving myself enough money to travel to work, pay for food etc.

The loan I'd get would just be for a car and then that'd be the only debt to my name as I'd take a little bit extra than I needed for a car to completely pay my cards off, as I've already cut them up, I don't have access to them anymore. I can survive without a car for a while but it'd just make my life so much easier. 

If the banks get a whiff of consolidation they will run a mile. The only time that would be worth it is if you got a lower interest rate for nudging over a threshold. Echo the above though, don't take the loan, clear the debt and save to buy the car cash.

Jamesyb123

If you have disposable income to put towards a loan maybe an option would be to save that for 6-12 months then buy a car you can afford for cash? In the mean time you would still have been paying your other debts as you said they’re affordable and you’ll find yourself in a nice position

MrFrugalFever

@Benc98 everything you have said so far is pointing towards a further debt problem. ‘Late payments’, ‘pay credit card off with excess loan’ etc. 

Forgive me for being blunt but it is the wrong mindset. It would surmise that you are looking to consolidate with a loan that also purchases you a car at the same time but enables you to lower your monthly payments by spreading over a longer term, thus ‘freeing’ up a bit of disposable income. 

As mentioned above, service your current debt with all available income, consider the car when in a better position. You still need to factor the cost of running and owning the car, if you’ve burdened yourself with a debt that provides little freedom in way of disposable income then you may end up using credit to fund the running of the car thus plunging your further in to the red.

cymruchris

How far do you need to travel to get to work? The summer is approaching (apparently) - could you bike it? And keep throwing money in the pot until you can afford your runaround? Another piece of bluntness here - (to which I could be wrong - but have known many people in a similar position) - you're obviously now in a decent job for the moment - and you probably want everyone around you to see how successful you are - and that shiny second hand BMW for £8k would probably look just the part. That'd show the world how successful you are - right? Wrong!

You have to live within your means rather than relying on loans if you can possibly do so. Look for a car that is relatively cheap to run and insure (no car is really 'cheap' these days) and spend the minimum needed to be able to get around safely. Don't worry about the image - as you'll be building up your bank account which is far more important. You'd likely pick up something with a years MOT for a £1000 or less that was in decent running order - add on the insurance cost - and that'd get you a years worth of motoring until you were able to save a little more to spend a little more.