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Slowly clearing debt,but worried about credit rating

(7 Posts)
CurlyWurlyCatcher Thu 10-Mar-16 11:02:44

So I have a credit card with £1800, a store card with £1200 and an overdraft of £1500. I took these out a few years ago at a time that I could afford to make large repayments each month from my wages. However, my partner was made redundant. He quickly got a new job but the hours/days meant that I had to give up my job and pick up the majority of childcare as we couldn't afford the new necessary childcare for DDs (under 5). DP is the main breadwinner by far so his job takes priority. Slowly the debt has crept up as things have needed paying that we can't afford as easily now that our joint income is lower than before.
As things stand at the moment, I earn enough to make the minimum payments each month and often some extra, but always the minimum. Until my children are in school and I can go back to work full time, I will be stuck with these debts slowly chipping away but not making any significant progress.
Obviously this wasn't planned to happen this way at all and I'm paying for my money mistakes now (literally!). My credit rating isn't great - not awful, but not great due to the amount of credit I have. What I want to know is, as long as I keep paying the debts and not missing payments, if the plan works to pay back the debts in the next 5 years or so, how will this affect my credit rating in the long term?
Once the debts are paid off, will I still have a 'bad' credit rating for years?

Sorry I think this is a bit of a ramble! blush

QuiteLikely5 Thu 10-Mar-16 11:06:16

You don't get a bad credit rating ft having debt, it's the opposite actually!

So if you have been making all payments on time every month you will have no problems at all.

Something to consider though would be getting a loan to clear all three things and then making one monthly payment, the interest will be lower this way and you will probably pay the debt off quicker.

If you do this make sure you cancel your overdraft and cards though!

CurlyWurlyCatcher Thu 10-Mar-16 11:10:52

Thanks quite

That's really helpful to know. I have been hoping to do something like that for a while, my only issue is that I don't think anybody would lend me enough money to cover my debt in the first place, if that makes sense?

QuiteLikely5 Thu 10-Mar-16 11:16:35

Of course they will lend you money, as long as you have a credit rating that does not demonstrate missed payments, late payments etc this shows lenders you are a reliable client to lend to.

If you have online banking you can usually apply that way and funds are usually released fairly swiftly

CurlyWurlyCatcher Thu 10-Mar-16 11:28:49

That's great. I'll look into that when the children are in bed later. Thanks quite smile

19lottie82 Thu 10-Mar-16 15:40:32

quite it's inaccurate to say "of course" potential lenders will lend the OP enough to cover her debt. They will consider other factors, not just history of any late / missed payments. They will also look at income and existing debts to make sure they adhere to responsible lending guidelines.

If the OP is offered a loan she will need to make sure that the APR she is offered is less than the APR of the cards / overdraft, otherwise it will be more expensive in the long run.

There is no guarantee of being offered an advertised rate that lenders use to advertise their loans. They only go to the most financially attractive applicants. (Legally they have to offer them to at least 51% of those accepted).

19lottie82 Thu 10-Mar-16 15:42:25

OP please bear in mind that applying for loans can have a negative effect on your credit history.

Look for lenders that offer a "soft search" which won't impact on your history but will still give you an idea on what your chances are of acceptance and the APR likely to be offered.

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