Debt Consolidation - impact on credit score?

[BellaMaroni]

Hi all,

I've currently got approx. £18k debt spread out across a loan and various credit/store cards.

I haven't missed a payment in 5+ years so my credit score is 999, but I've realised that whilst I'm paying £500+ per month in repayments, the overall balance isn't going down because I then overspend and get more stuff on credit (probably why credit score is so good!)

So, I've applied and been accepted for a loan to cover everything, £18k over 2.5 years which will cost about £620 per month. I've also signed up for YNAB and currently looking forward to budgeting my first monthly salary at the end of this month. I've then created monthly/weekly shopping lists to keep me on budget and stop spending money on things I don't need that ultimately end up in the bin.

I'm then going to close all the other accounts to avoid temptation once the balances have been cleared by the new loan.

Does anyone know if this will impact my credit score, if i'm essentially closing 6 separate accounts at the same time and replacing them with one bigger account? I suppose at the end of the day it won't change anything, as my plan is to get debt-free then stay that way, but just wondering what will happen to my score so at least I'm forewarned!

Also, any tips for using YNAB or general advice on reducing overspending would also be very much appreciated!

[namechange2pointoh]

You plan to take a loan to consolidate debts that costs more than you are paying now?

[BellaMaroni]

Yes the monthly payment is higher, because then it will be paid off sooner (the interest rate is only 2.7% on new loan).
If I carry on as I am now. It will take 3-4 years and will cost me a lot more money!

[namechange2pointoh]

Ah right, that makes sense then.

[Silvertap]

Get thee to the Debt Free Wannabe board or Money Saving Expert.

The fact you're even considering your credit score tells me you haven't had your light bulb moment.

[Silvertap]

I didn't mean that to sound harsh. well done for making a cracking start x

[CantankerousCamel]

My husband has just consolidated and credit score improved

[BellaMaroni]

Thanks silvertap, wasn't harsh at all, you're probably right! Hopefully it will come over the next few months once I start seeing the balance go down something has definitely changed in the way I think about money over the last few weeks though, I usually just keep spending and spending and spending! Got a £4k pay rise a few months ago and I don't feel like I'm feeling the benefit because I don't budget well - I'm vowing to get much better though!

Will take a look at those other boards too.

Glad to hear your dh score improved, camel!

[imnottoofussed]

I recently got a 0% credit card and transferred my other credit balances. Score went down as my credit utilisation is lower. I haven't closed the other credit accounts but they have £0 owing on them so my score improved because I am not using all the credit available to me.