Money&Debt

[malky1]

Hi,trying to get all my debts sorted,struggling the past 2 years but somehow managed.Got bank loan for 10k two years ago paying it back at 22.9%,all I'm looking for is a loan with a much better apr,Checked my credit score which is poor,any good advice please.

[Snoopy1948]

Re: Money&Debt

Hi malky1 ...................

The first advice that I would give is never to replace one loan with another and this usually holds water unless someone with a shotgun is behind you!

Interestingly, how did you manage to get a £10K loan with a poor credit score? Do I assume that was with a lesser known 'centralised' finance house and secured on property?
And did the loan consolidate all debts at that time or do you currently still have some alongside this loan?

To give a hint of which direction to consider, it would be better to have a thumbnail sketch of everything you owe, a current income and expenditure statement, your status as far as assets and property go ( if any ) and what current arrangements you may have with creditors, again apart from the loan.

MY thinking is that it will be hard to consolidate debts including a £10K loan ( whatever balance that holds ) while you retain a poor credit score and that one problem is probably insurmountable. It would be better to have a well managed and creative debt management plan rather than use someone else's money at cost.

Have you sought debt advice from your local Citizens Advice Bureau or other debt advice agency? The CAB is always a good place to start and while their own work load is heavy, they can either help you themselves with a good debt management plan or refer you on to a more appropriate agency. What is necessary is for someone to create a concise income and expenditure statement ( showing disposable income ) and match that against your debts. But in addition, debts must be correctly prioritised for payment and they will help you with that. I have met countless people religiously paying doorstep loans at £100 a month when they are facing eviction due to non payment of rent, when it should be clear where the priority lies.

https://www.citizensadvice.org.uk/

[malky1]

Re: Money&Debt

Thanks for the reply,I was surprised myself with my own bank ( TSB ) lending me the 10k which I used to pay of a catalogue debt of about 8.5k,my credit score was much lower than is just now.I want to stay away from debt management company's.i have a lot of debt but manage in one way or another.A good loan with a good rate would be ideal for me but have no luck

[Snoopy1948]

Re: Money&Debt

Hi malky1 ..

I didn't actually specify a debt management company as I believe that through them you can lose direct control of your debt situation. What I had more in mind was a debt management plan that you can regulate and maintain yourself. The CAB are very good at assisting you to create and agreeing these from source and you do the rest. I have often seen this very question on a money advice site that I contributed to and your only source of loan funding can only come from family and friends as commercial lenders will not entertain you. Believe me, a good loan at a good rate would require an excellent credit status. You were indeed fortunate with TSB but I would question their responsible lending policy if you had substantial debt alongside that.

Do I assume that you total level of debt remains in excess of £10K? Have you taken any advice on their priority? Do you have assets, on which to secure lending ( i.e. property ) ? Or indeed do you have assets that may be at risk should you not get your debt under proper control?

Sorry, I don't mean this to sound invasive to any extent but I have spent years discussing personal debt and where borrowing more to consolidate is impossible ( and it is becoming increasingly so ) then other options should be considered.

[malky1]

Re: Money&Debt

Thanks Snoopy1948 for all your feedback, I'll try and ride the storm for another 3 years until my loan is finished and maybe in between my credit score will improve if I keep paying everything which my high level of borrowing seems to be affecting my score.

[Kati]

Re: Money&Debt

Hi malky1 ..

I didn't actually specify a debt management company as I believe that through them you can lose direct control of your debt situation. What I had more in mind was a debt management plan that you can regulate and maintain yourself.

Thanks Snoopy1948 for all your feedback, I'll try and ride the storm for another 3 years until my loan is finished and maybe in between my credit score will improve if I keep paying everything which my high level of borrowing seems to be affecting my score.

I believe [MENTION=62334]Snoopy1948[/MENTION] was referring to a Self-Managed DMP (where you can arrange lower payments with your creditors YOURSELF)
Can you do an income/expenditure that you could send to the loan company to show your debts/expenses and how much you can actually afford??

I'll tag [MENTION=48934]Debt Camel[/MENTION] to offer extra advice (she's good at this) xx

[Debt Camel]

Re: Money&Debt

The problem about whether to go for a DMP when you are just about managing the debt repayments isn't easy - I've written about it here: http://debtcamel.co.uk/hard-choices/...-vs-comfy-dmp/

If you think you can get through the next three years, this is probably the best option,

Things you can do to improve your credit rating in the meanwhile:

- overpay any credit card debt. You may think this is unrealistic advice, but I'm not suggesting a massive overpayment. Say this month's payment is £57.20. I suggest you decide to fix your repayments at £60 by setting up a standing order for that amount. (Obviously this isn't going to work if you are still spending on the card!) this is hardly any more is it ... but it will save you a LOT of money if you can do this and also credit scoring likes to see that you are paying more than the minimum.

- stop making any credit applications for at least a year

- once any balance on a credit card drops to below 25% of the limit, ask for the limit to be halved.