Excellent Credit Score / Very Weak Affordability 19 October 2021 at 11:25AM in Credit file & ratings 3 replies 205 views

Ellalou

Hi everyone, 

hoping for a bit of advice..on my Experian Credit report I have and excellent credit score (962 / 999) however due to having a lot of open accounts / loans/ credit cards I have a very weak Affordability Score! Does anyone else have any experience of this?

I always pay bills on time and have nothing negative against me apart from the amount of credit I actually have.

My intention was to take out a £50K loan to clear all of our outstanding debt and consolidate and reduce monthly outgoings..most of the cash was taken through loans/ credit cards to do home renovations. 

If I take out the 50K loan, clear the debt then I would only have that and our mortgage as well as utilites to pay. The problem we have now is actually getting a loan with a low affordability rating! Would lenders take into consideration that the debt will be cleared and we would not have the monthly outgoings we have just now therefore will be able to afford it? 

Or would we need to look at a bad credit loan (even though we always pay on time!).

The other option would be a remortgage (although we are in a 2 year fixed just now). However we have £184k outstanding on our mortgage and the house is currently worth around 275K so we do have the equity. Again i'm not sure how favouribly we would be looked at by mortgage lenders even with the high credit score due to the low affordability showing. 

Any advice on what to do / who to speak to would be appreciated! 

Thank you 

L

[Deleted User]

Ignore your made up credit score, no lender ever sees it and no judgement on your credit worthiness is based on that score

You're extremely unlikely to get a personal loan for 50k full stop (25k is generally the biggest unsecured loan)

Even if you were, consolidation loans do not work for a variety of reasons (e.g. not changing bad habits, running up more debt / spending more due to reduced payments etc)

Lenders will not take anything into consideration beyond existing debt and affordability. A consolidation loan is just viewed as another loan, if you have 50k of debt and apply for 50k loan they will assess it based on 100k of debt as you could put the 50k on a hot tip nag on the 3:30 at Kempton rather than pay off your debts.

Go to the debt free page and post on there for advice, don't try and borrow your way out of debt

Thrugelmir

Ellalou said:

I always pay bills on time and have nothing negative against me apart from the amount of credit I actually have.

The risk is one day that you cannot meet your committments. £50k is a sizable sum to be repaid.  How you manage your personal finances is far more important than the credit score. Which has zero value to those that lend money. 

eskbanker

Ellalou said:

My intention was to take out a £50K loan to clear all of our outstanding debt and consolidate and reduce monthly outgoings..most of the cash was taken through loans/ credit cards to do home renovations. 

If I take out the 50K loan, clear the debt then I would only have that and our mortgage as well as utilites to pay.

If you have a range of debts at different rates then your best bet would be to prioritise overpaying the ones at the highest rates, in order to reduce the cost of servicing them and ultimately start making serious inroads into full repayment.

Ellalou said:

The other option would be a remortgage (although we are in a 2 year fixed just now).

Securing the debt against your property is probably best avoided if you've got this far and are still able to keep up with repayments.