Consolidation depression 30 September 2021 at 6:54PM in Loans 9 replies 882 views

Chrisps229

I have two credit cards, totalling 15k, I am overpaying the smaller one to hopefully get it rid soon, to then overpay the bigger one (think it's called the snowball effect). I have tried to get a loan to pay them off quicker and cheaper. But although on a soft search I get accepted/100% eligible, when I fully apply I get rejected. Which then damages my credit record for about 6 months. Does anyone have any advice or suggestions? 

ItsComingRome

Chrisps229 said:

I have two credit cards, totalling 15k, I am overpaying the smaller one to hopefully get it rid soon, to then overpay the bigger one (think it's called the snowball effect). I have tried to get a loan to pay them off quicker and cheaper. But although on a soft search I get accepted/100% eligible, when I fully apply I get rejected. Which then damages my credit record for about 6 months. Does anyone have any advice or suggestions? 

Just pay the cards down. Consolidation rarely works.

MalMonroe

Yes I agree with ItsComingRome. Pay the cards down first - ensure to overpay the one with the highest interest rate, which may not necessarily be the one with the highest balance. In a while, you could perhaps apply for a 0% interest Balance Transfer card - once some more has been paid off. Before I was helped out by Stepchange and a DRO, I tried a loan for consolidation but it wasn't too successful.

Thrugelmir

Stick with your current plan for the time being. Clear one then tackle the other card. 

Pixie5740

Chrisps229 said:

I have two credit cards, totalling 15k, I am overpaying the smaller one to hopefully get it rid soon, to then overpay the bigger one (think it's called the snowball effect). I have tried to get a loan to pay them off quicker and cheaper. But although on a soft search I get accepted/100% eligible, when I fully apply I get rejected. Which then damages my credit record for about 6 months. Does anyone have any advice or suggestions? 

Consolidation won’t help if you haven’t tackled the root cause of your debt and consolidation is usually the first step on a debt death spiral. My advice is to stop trying to borrow your way out of debt and post on the Debt Free Wannabe board. 

Ebe_Scrooge

As per the previous replies, consolidation loans rarely work - you need to tackle the root cause of the debt.

As far as the reason for your rejections goes, it's very simple.  A lender cannot guarantee that you'll use the loan to pay off the cards - they have to take the view that you'll spend the loan on something else, leaving your credit card debt untouched.  Therefore, instead of a £15k debt you now have a £30k debt - so it's simply down to affordability.

sourcrates

Lenders are currently adverse to lending for consolidation purposes anyway, due to covid.

The very fact your applying suggests financial difficulty, and will most likely be why you got rejected.

Pop over to the DFW board and we can make suggestions on how to tackle this the right way.

Chrisps229

Ta for all advice. 

DCFC79

Chrisps229 said:

Ta for all advice. 

Just keep on paying them, look at your spending and see if you can cut back on anything.

superbigal

What you might find is that if you manage to clear one of the cards you get a 0% balance transfer offer on that account within days.  Pretty standard practice when an account is cleared.
That then may allow you to transfer your other card across.