where has the credit gone?

[winterblues25]

I’ve usually never had a problem being accepted for credit but just tried to increase my credit limit on my card recently and was refused, new balance transfer card and loan applications refused, credit score good, even the balance transfer offers on my credit card which I’ve had for years have been withdrawn??

What’s subsidised accommodation?

So to confirm your combined monthly salary is currently £3900? With you working part time?

I’m struggling to understand how your DH is a high tax payer with that amount coming in unless you literally work a handful of hours a week? Or he’s massively paying into his pension?

I wouldn’t say that’s a lot of salary to have that much debt (and to be in debt consistently for years and not paying it down), they are making it harder and harder to get credit cards and loans and rightfully so. If you haven’t paid your debt down to zero for years then your profile is a risky one hence the higher interest rates. Your income is not much more than two people working full time minimum wage. Those people would struggle to get good credit offers too.

The answer is simply that you are living beyond your means and you have two options. 1) accept the higher interest rate and get into even more debt 2) cut back on your spending and focus on paying that debt down as much as possible. Do you live in a very expensive area? I know people who use credit cards but they pay them off every day. As far as I’m aware I don’t know anyone who snowballs debt onto credit cards and has racked up large sums. Maybe the thought process that everyone does it is what’s led you to being here.

One jumper, one skirt, and two shirts? 😬

Most people at DC's primary had one jumper, one skirt, and (granted) 3 polo shirts. Having a complete set of uniform every day is a huge unnecessary luxury, that many people can't afford.

I feel like you’ve got this mad focus that you earn a good wage between you, we earn almostly exactly the same as you, and we only have 2 children and i certainly don’t see us of having a good wage, im part time, my husband earns a good wage but our monthly totally is only what 2 full time people earning minimum wage would get. I am absolutely chaotic with money, have always spent beyond my means, cannot get credit easily. And I think you are in the same situation. The reason you can’t get credit same as me is that it’s seen as unaffordable and you simply don’t earn enough to pay it back.

Exactly. The IMF isn’t going to come in and repossess Wales if we don’t pay. But the lenders could call in all of the OP’s debt if they wanted to, and that would be very messy. The trap OP has fallen into is imagining that this line of free credit would always be available, and not allowing for contingency in case the cost of borrowing grew. I genuinely struggle to see where all their income is going each month. And I know it sounds judgy, but I can’t fathom bringing a third/fifth child into this situation when it was already clear that debt was an issue and essentials were having to go onto credit cards. Security and stability mean far more to children than new clothes and clubs, and the precarious financial situation of this family jeopardises this for all of them.

Not great?! It's appalling. Paying 24% interest on essentials is ridiculous! You'd pay almost £50 for £40 worth of groceries, nearly £75 for a £60 pair of shoes... It would be daft to even consider it. Much better to cut down (I am sure there are plenty of non-essentials if OP looks hard enough) and pay off the debt, then live within her means.

I think @winterblues25 you're talking about paying the minimum whereas others are talking about paying it off in full each month which clearly isn't happening.

I don't know anyone who does, but if you read the financial press, it's clear many do. I'm not defending it; the op appears to be financially illiterate and entitled.

Living within your means isn't "being a martyr to poverty", it's being responsible.
I'm old, and can remember the days when interest rates were 15%. That's made my generation inclined to be cautious about debt.

Go through your bank statements and see what regular payments are for things you can do without. Before I retired, I worked in welfare rights, but also did a lot of work with clients with poor financial management and debt issues.

If I was given a pound for every client who was paying for (eg) several tv subscription packages and leasing a car that meant they could barely meet their other outgoings and had to put any unexpected essential purchases on a credit card, I could probably pay off your debts with the money I'd raise!

I had the same thing - credit rating excellent forever (I’m a financial advisor) i took out a new mortgage and my credit score fell to good and not excellent. When I looked into it two things happened. 1. I had one late payment on a credit card and this has never happened before. I don’t have debt, however had made a purchase for £250 and due to being on holiday I forgot to pay the balance - to be honest I purchased on the day the credit card was due to be paid and it was added to that month and not the next payment- this was an honest error in 20+ years of credit but anyway it was left as a late payment. 2. Remortgage and release additional funds - this was not my main home and was not to pay off debt but anyway again this reduced my credit rating. Yes it is terrible that they are forcing you to pay 24 % interest when you have not missed the minimum payment

I think when you do a credit card application they check affordability and presumably they are declining because whilst we know you plan to balance transfer and close the other credit card, they can't assume that. Let's say you owe 10k on your current credit card and want a new credit card with 10k, they have to look at it like you having access to 20k of credit. Unfortunately all the credit requests that have been declined will reflect negatively on your credit score, making it harder to improve your credit rating. I know a 25% interest rate makes it ridiculously hard to pay the debt off too. Hope you find a solution and can get debt free.

I wasn't approving it......just pointing out that many people don't live within their means.
I agree entirely re: compound interest rates etc.
Saying 'many people do', isn't justifying it, or condoning it, just stating facts.

Hi OP
There are a number of reasons I can think of why you may not be able to access more credit now when you had no problem 2 or 3 years ago.
The affordability of debt
The last time you restructured your debt you may have borrowed up to the limit of what they would lend. Your circumstances have since changed.

1. You have a 1 year old. This means that your outgoings have increased (childcare and normal household expenses) and your income will have decreased for a period (maternity leave).
2. Your mortgage payments have probably increased so you have less disposable income to be able to service your debt.
3. Even though you intend to use a loan/ increased credit limit to pay off an existing debt you are actually applying to increase your debt by up to £8,000 ( you haven't stated the exact figure).
4. You appear to be in persistent debt. Banks will be very reluctant to offer you more debt.

I noticed you said that you received offers for new (purchase) credit cards just not balance transfer cards. I would think that if you actually applied for these you would be declined.

You say that at the moment you are paying £500 interest a month and managing to reduce the balance by about £2,000 a year but the new rates mean that the interest will go up to £3,000 a year. If these figures are correct you are not going to be able to pay the interest (never mind the debt) and so your debt will increase. This isn't sustainable.
If your existing credit card is with your bank it may be worth going and speaking to them regarding your debt to see if they can help you. Because it is persistent debt they may have better solutions for you.

Minimum wage workers do not take home 2k a month!!!

Your income is similar to ours, and we don't have kids at university and only have two children. You're right we don't save much, or have opportunity to live excessively. We use credit card for emergencies though.

We buy decent food, and pay for kids clubs. This is non negotiable. Clothes we'll often pick up second hand. Heating we are really cautious with, we wear layers around the house, and try to keep to minimum heat we can get away with, without having a damp house. We just get used to thermostat being low and know no different. Days out are cheap ones and foreign holidays are about once every five years. This year will be a caravan park. I think you need to change your mindset from relying on debt to raise your family to being more frugal.

I also don't understand how you both have 'good jobs' if your combined take home pay is under £4k a month.

Hi OP, it’s probably been mentioned but I haven’t read every post, but are you signed up to Credit Karma? I use their free version and it tells me my credit score (which is much more realistic than Experian which has always been the full 1250/1250 even when I’ve been in a lot of debt in the past. Credit Karma’s version seems a lot more realistic though.

Anyway - it also tells you what you need to do to improve and get a score boost.

Snoop is also good for being able to see all your accounts in one place.

My late partner and I found similar when we paid ours off; our credit scores dropped. My credit score dropped when I retired, too, it's down to around 900 now, from 1200-odd when we had a mortgage and were both working.

Minimum wage workers would take home around £1800 a month
(based on a 40 hour working week, no student loan or pension contributions).

So agree, not £2K but close enough to it that OP and her DH with net pay of £4K does not make them high earners.

Yes, totally agree. OP also makes low mortgages sound like some kind of privilege. I've chosen a house within my means in an area i don't particularly love, with lots of work that needs doing. It's a sacrifice, not a privilege. OP is also allowed to downsize to access a low mortgage.

By the sound of it, OP has CC debt because they've been living beyond their means. Unless they are able to significantly reduce their outgoings or there is a decent pay rise in the pipeline, I think this would be unwise. They could well end up with bigger mortgage payments and new credit card debt in a couple of years time.

It could be an option when the DH's children finish uni though, as he'll (hopefully) no longer be subsidising them.

You have 5 children between you and 2 are at uni. That's a lot for anyone. I think saying its the cost of taxes over and over is a misnomer. Yes taxes are an issue, but you and DH made a choice to have three additional children, knowing that your DH already had children and this would be expensive. Your younger children are very young so you would both have been aware of the financial crisis in the UK when you made that choice. Your issue is that you have 5 children at a time of high cost of living and instead of living within your means (yes children may not be able to have swimming lessons if you have no money) you take on more debt. My DD is desperate to go on a school skiing trip, but I cant afford it. Its the way it is. I wont put it on a credit card. I havent seen a masisve clamp down on credit, but there is a renewed responsbility on banks not to give credit to people who cant afford it. Which is where you are.

It’s not something I’ve noticed. I got into debt a few years ago by getting credit cards while on mat leave. I have used 0% balance transfer to manage this, so I don’t judge people for using credit cards instead of loans, as long as there is a plan and an end point. I do live in fear that one day it’ll be a no as the interest would mean not being able to clear my debt. I should be finished paying it off in around 18 months’ time as I prioritise repayments (£300 per month at the least) and don’t buy myself anything at all or go on holiday or anything. My child gets vinted bundles and hand me downs. £2800 take home is a bit more than I earn and my money doesn’t go far, definitely not enough that I could support two adult children who could work alongside their studies.
I went into mat leave without debt and with a small amount in savings and still my finances went to hell. My debt is one of my biggest reasons for not having a second child so I do judge anyone who already has quite significant debt and no savings and chooses to have a 3rd child (5th for your husband) and a whole year out of work. Sorry, I just think it’s madness and way too precarious.

This is the problem millions are going to face in a cashless society.
If everything is based on credit then the banks own you and can deny you credit and switch you off at any time and then what?

Homelessness and crime will be through the roof.

We weren't taught financial education when I was at school and so many people I've encountered through work don't understand budgeting.
Dave Ramsey is a great place to start, his books are amazing (although American so some things don't apply) for anyone in debt or who wants to learn to budget.
I was always so crap with money and I wish I'd read his books when I was much younger.