Credit Cards mounting, want consolidation cannot get accepted? Help!

nearlyrich

To work out the most effective way to pay off your credit card debts take a look at the what's the cost site, getting the higher apr cards cleared first really can save you £££s. If you keep a credit card after you are debt free ensure you have a direct debit set up for the full balance, that helps me no to go crazy when I am out therre looking at nice things I would like to own.:)

northerngirl_2

Hi shornuk,We're looking into a loan to consolidate our debt(think its the best option for us everything is lumped together and just the one payment)we're topping up a previous loan with A&l and since the rate has gone down payments should be cheaper just waiting to get paperwork and are waiting for the paperwork for a loan with Tesco's for 20k their apr is 6.3%online which is a good rate and its over 7yrs,the A&l top-up is over 5yrs and we' will actually have around £150 a month left whereas now we having £o.Our big mistake was when we took the first loan out we still kept with the plastic(BIG mistake)now they are all cut up,hope this is of some use.

Debt_Free_Chick

Re consolidation loans ... these DO NOT clear your debt. They only lump it all together.

Loans are often less flexible as many do not allow you to snowball, by paying off extra to repay the debt more quickly.

Also, people are often tempted by taking a loan with lower repayments. If the interest rate is low, then this might be a good deal. But all too often people go for lower repayments over a longer period of time - even with an attractive rate of interest, you often end up paying more interest.

Getting a new loan when you have existing debt can be very difficult. One of things that lenders assess is the total amount of debt you will have after you take out the loan - and they will add your existing debt on if they do not know that you wish to consolidate. For this reason, with existing debt, you will often be refused a loan or only get a loan with "strings attached". These can be an unattractive rate of interest or, worse still, a secured loan or, even worse, loans for sub-prime applicants that are a complete rip-off!

Far better to cut up the cards, button down your budget and live a little more frugally until you've paid off all your debts. If you can combine balance transfers at fixed life of balance rates, all the better. But if you are maxed out on existing cards that's not an option and getting a new card can be difficult.

HTH

Shornuk

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brummiebabe

It would also be helpful to break down ALL of your outgoings (gas,food,insurance etc,etc!!) I know (from lurking on this forum for a while) that the regular debt-free wannabees will ask for this! It's not just about what outgoings you have on cards, its also about cutting your overall expenditure - so that more can go towards the debt!!! Good luck, you've come to the right site!!!:D

garyclay

For a start I'd get my credit files from the CRAs (Equifax, Experian and CallCredit) for 2 quid a piece and see how bad your credit history looks. It's pointless thinking about consolodation if the rate they are going to offer is worse than you have now. In order to get a decent loan rate you will need perfect payment history, no defaults, no CCJs, no arrangements to pay.

The fact that you say you have gone over your limit means they will have propbably marked this against your file.

If the files look poor then it seems pretty pointless consolodating the debt as you'll end up paying high rates and it doesn't solve the problem.

In this case I'd suggest seeking out help from the Consumer Credit Counciling Service, Citizens Advice, National Debt Line and sorting out a repayment plan. All of your creditors are responsible lenders and as such will most likely agree to a repayment plan with 0% if approached in the right manner.

However the impact on your credit worthiness will be quite severe and will affect you for at least 6 years and more likely longer (6 years + time it takes to clear the debt). In this case you will no longer be able to secure a mortgage from a 'prime' lender (ie high street banks etc) and will need to look at the 'sub-prime market'.

This is not all bad as the sub-prime market is becoming more competitive and companies such as Kensington, Birmingham Midshires and GMac are becoming more and more realistic about their interest rates.

So I'd say, if you can paint for all hours god sends then do so and pay them all off, do so. If not approach one of the free debt management agencies and get help.

Shornuk

Im basically lookling for the "less damaging" way to pay this money off.

I would rather keep it on the cards and pay it off as I can if this means that once I've done that there are less "bad marks" against my name!

garyclay

In that case, send the 2 squid cheques off to Equifax, Experian and CallCredit and see what your current status is.

Or sign up to checkmyfile.com and get a three agency report and credit score.

If this looks Ok then it is possible to pay the cards back normaly and retain a decent credit rating.

With a decent rating you can probably get a decent mortgage.

Having thought about this more I've sent you a 'Private Message'

skintchick

Shornuk wrote:

My income is £1000 a month, and from that £690 goes towards household bills and food.

Can you break that £690 down for us? You might well be able to cut back but to help you do that we need to know what you're spending now. And is that income your take-home? I'm assuming so but please clarify.