Debt consolidation loan a good or bad idea?

Lettyx1

I have nearly £9,000 on 2 credit cards.  I often make overpayments but it's taking too long for the balance to go down.  I'm thinking of getting a loan to clear the debt as the interest is so much lower and by paying the equivalent of the current minimum payments (plus a £100 per month overpayment), I would pay off the loan in 3 years (I've had credit card debt for around 9 years since having  2 lots of 1 year maternity leaves in that time and subesquently going part time).  My current fixed rate mortgage deal ends in 12 months and I'm worried that having a debt consolidation loan would look bad.  I'm not sure how long a hard credit check remains visible to lenders.  Would it still show in 12 months?  If I get a 3 yr loan now then of course there will only be 2 yrs to go when it comes to re-mortgaging.  I hope that's clear!

[Deleted User]

Consolidation loans are very often a terrible idea.  And if 9k of debt is a struggle, lenders will certainly think that doubling it up to 18k is too much. 

Head for the DFW boards for advice on tackling the debt in the best way.

[Deleted User]

You need to remember (or just read any number of the tonnes of posts on here about debt consolidation) that borrowing to pay debt is never a good idea as it neither addresses the underlying reason for your debt nor does it avoid the chance of you running up the debt again once your CC are clear. Because of this, lenders do not see your debt as credit card debt minus loan debt, but rather credit card debt PLUS loan debt as you could borrow the money with the best intentions, then your car breaks, your dog is sick and you spunk the last £500 on Dodgy Dobbin at the 4:45 at Chepstow and suddenly you owe the original CC debt and now the loan and struggle to pay that back as well. Hence they judge affordability of both.

Aside from looking at the debt free pages for advice on paying off debt, selling, working more etc you could try the option of a BT card to at least clear some of the debt off allowing you to throw more at the expensive debt while not paying interest on the BT card. Or pay the minimum on the less expensive debt (lower interest one) and throw everything at the higher interest one to clear it faster so you can pay off the other quicker.

You need a lightbulb moment though and a realisation that borrowing to deal with borrowing is not the solution

Lettyx1

Thank you for your repsonses.  You have echoed my thoughts; I find it very interesting that my bank has emailed me offering the product.  Of course I realise the banks just want to make more money.  I have started concentrating on throwing extra cash at the credit cards and I just need to as disciplined as I was pre-travelling and children!!  It's only since then that I've had any outstanding balances.  When I was single I paid for things using credit and then instantly transferred the money across from my bank account which gave me an excellent credit score.  Its all discipline and I just need to pull my finger out!!!  

[Deleted User]

Lettyx1 said:

When I was single I paid for things using credit and then instantly transferred the money across from my bank account which gave me an excellent credit score.

Paying instantly can make it look as it f you don't use credit at all, hence the excellent pretend credit score.

Once you get the debts cleared, wait until the statement until you clear in full, so as to build an excellent credit history.