Author Topic: £13,000 in debt but need to keep a good credit rating!!  (Read 23600 times)

mikkilaw

  • Sr. Member
  • ****
  • Posts: 53
£13,000 in debt but need to keep a good credit rating!!
« on: May 18, 2010, 09:55:02 PM »
Hi everyone I'm new here and was hoping this might be a good place to get some advice and empathy.
My dilemma is that I have a balance around £10,000 on credit cards and about £3,000 outstanding on a personal loan but, because I work in an FSA regulated field, I have to maintain a virtually impeccable credit rating in order to keep my job! Much of the credit card balance has been at 0% until now but, over the next few months, the transfer offers will expire. I've applied for other cards for more 0% deals, applied for loans to consolidate the debt, even tracked my credit rating week-on-week using Experian's Credit Expert service, but there is nothing forthcoming that offers a better deal. Indeed, when I approached my bank for a consolidation loan, they agreed to lend at 27.9% - that's a higher rate than any of my cards!! I've thought about all the options, DMPs, IVAs, Bankruptcy, but as far as I can tell they all have varying degrees of negative impact on one's credit rating. The most I can afford to throw at the debt per month is probably £200 but that barely covers the interest, and I would probably be in debt for the rest of my life at £200 per month!! But if I lose my impeccable credit rating I will have to retrain, as for the last ten years I've worked in financial services, and jobs in this area would not be available to me should my credit rating become soiled. Hope someone can help, thanks for reading this!!

Steven Jackson

  • Hero Member
  • *****
  • Posts: 281
Re: £13,000 in debt but need to keep a good credit rating!!
« Reply #1 on: May 19, 2010, 09:43:48 AM »
Hi Mikkilaw
 
Unfortunately if your key priority is to maintain your credit rating, the only thing you can do is continue to pay your credit cards and personal loan as agreed. If you attempt any kind of debt management solution (DMP, IVA or bankruptcy) your credit rating will be damaged as at the very least default notices will be recorded on your credit file.
 
I agree with you that the rates of interest charged on personal loans are currently way too high. The following article which I wrote in January this year gives further comment on this: http://www.beatmydebt.com/news-articles/are-the-banks-taking-us-for-a-ride-personal-loans-are-more-expensive-than-ever.htm
 
The only other borrowing option is if you are a home owner. You could then consider releasing equity from your property to consolidate your debt.
 
Other than that, the only way forward which protects your credit rating is to continue to make the payments...
Debt Expert
ivainformation.com

AshleyPark

  • Sr. Member
  • ****
  • Posts: 63
Re: £13,000 in debt but need to keep a good credit rating!!
« Reply #2 on: May 20, 2010, 10:47:24 AM »
Hi mikkilaw,
 
Welcome to the forum. I agree that 27% is very high but as you mentioned your current repayments are only covering the interest payments so you could be paying these for the next 20 years without having much effect on the balance.
 
What term was the 27% over and what would be your monthly payment?
 
Lee
Ashley Park Debt Solutions Ltd
 http://www.ashleypa

Sovereign

  • Sr. Member
  • ****
  • Posts: 81
Re: £13,000 in debt but need to keep a good credit rating!!
« Reply #3 on: May 20, 2010, 12:39:27 PM »
Hello Mikkilaw,

Of course your FSA registration is of paramount importance to you. What is the reason behind your lack of funds. Is it that you are an IFA and finding work tough or are you in the employed sector and simply not earning enough to keep your head above water?

Yes, remortgaging your property is an option but you will be only too aware of the restrictions on mortgage offers at present and it may well be that your income is insufficient for the purpose.

Can you give a little more information to the forum and I am sure loads of free advice will follow.

Steve
Sovereign Consulting

mikkilaw

  • Sr. Member
  • ****
  • Posts: 53
Re: £13,000 in debt but need to keep a good credit rating!!
« Reply #4 on: May 20, 2010, 07:26:12 PM »
Thanks for the replies folks.
I am not a homeowner, I have hardly anything in the way of assets. I'm technically self employed but via an agency, working as a quality consultant in PMI. My agency do my tax etc., but technically I work for myself. I have been doing this ever since I was made redundant from working for an Investment Management Company two years ago.
As for borrowing at 27.9%, surely it makes no sense to consilidate at a HIGHER rate than one's current APR (currently averaging about 17%)?

AshleyPark

  • Sr. Member
  • ****
  • Posts: 63
Re: £13,000 in debt but need to keep a good credit rating!!
« Reply #5 on: May 21, 2010, 08:36:48 AM »
If its a fixed rate then you will know what you are paying back and how long it will take to settle the loan. If you carry on making the minimum payments to your credit cards then as you mentioned in your earlier post you will find the balance stays pretty much the same once your interest has been added.
 
Once you have had the loan for 6-12 months you can look at refinancing and obtaining a lower rate.
 
Lee
 
Ashley Park Debt Solutions Ltd
 http://www.ashleypa

Re: £13,000 in debt but need to keep a good credit rating!!
« Reply #6 on: May 21, 2010, 11:11:54 AM »
I agree with Lee on this one. I would rarely advise people to apply for a loan, however; if the loan is at a fixed rate of interest over a set time period (as most unsecured loans are) then at least your monthly repayments will eventually clear the debt.


Unlike your Credit Cards, each minimum payment services the interest; so your debt remains virtually the same..


If you did apply for a loan? It's important you do not use your credit cards and you plan a budget to avoid getting back into debt.


Kind regards


Dean

mikkilaw

  • Sr. Member
  • ****
  • Posts: 53
Re: £13,000 in debt but need to keep a good credit rating!!
« Reply #7 on: May 21, 2010, 06:17:52 PM »
I will go and see the bank again and see what they are able to offer - maybe they can do a better rate now, it was a few months ago I last applied. Indeed, I have seen this problem coming from a long way off, at least a year back. But it seems that the more responsibility you take for your situation, the more prejudicially you get treated!! Every time you make an application it impacts negatively on your credit rating, almost seems better to bury your head in the sand sometimes!

I'm really appreciating the advice folks, I will be sure to let you know how I get on at the bank tomorrow.

For the record, here's more detail:

Halifax PLoan @ 18.74% Balance £2,408.31
BCard @ 5.94% Balance £496.27
Egg @ 18.9% Balance £2,883.86
HBOS Card @ 18.9% Balance £1,393.31
Priority Club (BCard) @ 19.9% Balance £2,229.07
Virgin @ 16.9% Balance £3,305.97

(All rates and balances approx.)


Steven Jackson

  • Hero Member
  • *****
  • Posts: 281
Re: £13,000 in debt but need to keep a good credit rating!!
« Reply #8 on: May 22, 2010, 10:15:28 AM »
Hi Mikkilaw
 
I think Lee and Dean are right. Far better to consolidate the cards with a fixed term loan which means you know exactly where you stand and when the payments and loan will finish.
 
One word of warning. If and when you do get your loan, you MUST cut up your cards and never use them again. Cancel the accounts so you are not sent new cards when the old ones expire! I have seen countless debt problems get a lot worse after someone takes a consolidation loan but then gradually uses cards again for "emergencies". Before you know it your debt has doubled and you have a far more serious problem.
 
Good luck with getting the loan
Debt Expert
ivainformation.com

AshleyPark

  • Sr. Member
  • ****
  • Posts: 63
Re: £13,000 in debt but need to keep a good credit rating!!
« Reply #9 on: May 24, 2010, 02:41:41 PM »
Hi Mikkilaw,
 
One thing i would say that is true of any lender and finance broker and that is they will be able to tell you if you are accepted without doing a credit check. As long as you are open and honest with your answers when applying. A credit check should not be used to see if you qualify for a loan or credit card but simply to confirm the information you have given.
 
 
Lee
Ashley Park Debt Solutions Ltd
 http://www.ashleypa

mikkilaw

  • Sr. Member
  • ****
  • Posts: 53
Re: £13,000 in debt but need to keep a good credit rating!!
« Reply #10 on: May 25, 2010, 10:06:21 PM »
Steven, I have already done exactly that with my Vanquis card and my Capital One card - cleared the balances, called them up, cancelled the accounts and cut the cards to pieces. You'd be amazed how much waffle they give you though - they really try and try to keep your custom! You get transferred to a very polite, well spoken advisor who pretty much begs you not to cancel your account and then lists any benefits such as fraud protection or whatever nonsense products or offers the card may be bundled with. They have an aggressive retention strategy! But I agree, two down five to go! Or maybe four - I may hold onto the Barclaycard which does, after all, only have a £550 limit!

Lee, I didn't get round to seeing the bank on Saturday but have an appointment now on Tuesday June 1st. I will give them the full picture regarding my debts and outgoings. As for my wages, the bank get them before I do so they already know my net income! There are three possible outcomes, either they will lend at a rate I like, they will offer a rate that's no good or they will decline. So I'm putting the odds of success roughly at one in three. Failing that it's back to the drawing board. Presumably if my own bank won't lend to me there's not that much chance of me getting a decent rate elsewhere?

AshleyPark

  • Sr. Member
  • ****
  • Posts: 63
Re: £13,000 in debt but need to keep a good credit rating!!
« Reply #11 on: May 26, 2010, 08:44:58 AM »
You tend to find that your bank can offer you the best rate. But there are companies that lend to people who have been turned away by there banks. There is usually a premium to be paid for this eg higher rate but this does not mean they need to charge you any upfront fees!!!
 
Lee
Ashley Park Debt Solutions Ltd
 http://www.ashleypa

Steven Jackson

  • Hero Member
  • *****
  • Posts: 281
Re: £13,000 in debt but need to keep a good credit rating!!
« Reply #12 on: May 26, 2010, 02:58:30 PM »
Well done on the card cutting excersive Mikkilaw and interesting to hear your experiance of the credit card retention tactics Mikkilaw. Shame they are not so helpful when you legitimately want to borrow money.....
 
Good luck with the bank appointment. It is definitely hard to get good loan rates at the moment. I am not sure your are going to be able to get a better deal than your current 17% apr average but as Lee has said, a slightly higher fixed rate may actually be better in the long run as you can be sure the debt will be paid off.
 
Let us know how you get on.
Debt Expert
ivainformation.com

mikkilaw

  • Sr. Member
  • ****
  • Posts: 53
Re: £13,000 in debt but need to keep a good credit rating!!
« Reply #13 on: May 28, 2010, 09:18:19 PM »
I got a call today from the bank - apparently there is now a "no loan" status on my account, whatever that means. I still intend to keep the appointment though, as I'm interested in what they may have to say. I have not exceeded my overdraft limit or had a cheque or direct debit returned unpaid for years, and likewise with all my cards. But the sheer volume of credit versus my income is probably having an adverse effect on my credit rating.

I used to use the Experian Credit Expert Service to track my credit rating, but I didn't feel that the process they use for calculating credit scores was necessarily that accurate. Also the monthly charge was an unwanted expense. Even when my rating was in the "good" category accoring to them, I still got turned down for 0% cards and reasonable priced loans.

Regarding my emloyment status, I have a meeting with my manager next week to discuss in more detail what the exact requirements of my role are in terms of credit status. I have been totally open with the management team at work about my situation. After all, I know they do the checks because I saw them on my Experian credit report!!

Steven Jackson

  • Hero Member
  • *****
  • Posts: 281
Re: £13,000 in debt but need to keep a good credit rating!!
« Reply #14 on: May 29, 2010, 09:20:26 AM »
I think you are right to keep your appointment with the bank Mikkilaw but if they have already informed you that you have a no lona status over the phone, I do not think the branch staff will be able to do anything. Interested to hear if they can explain why to you though......
 
Again good idea to speak to your mnager at work. You never know, if you explain your situation and that you could deal with it if only you were allowed to enter into an IVA or the like, perhaps they could be flexible?
Debt Expert
ivainformation.com