Is there still a problem with credit for those on benefits?

[essexmat]

Apologies of this is the wrong forum section.

 

It occured to me today although it is not a great secret that the better off you are the more you can borrow at a lower rate - nothing new there,

however, is there still irresponsible lending about?

I only ask as I will give you my situation in bullet points as it is easier.

 

 

• Employed on a good salary to 2013
  
• Ran up debts on loans and c/cards to the tune of £19k in around 15 years
  
• Couldn't pay so undertook an IVA
  
• IVA paid in full for 3.5 years and made redundant
  
• Came to an arrangement to settle remainder as full and final payment from some of my redundancy pay
  
• Credit updated to say cleared and nothing outstanding so need to start repairing my credit rating
  
• Took a LUMA c/card with a limit of £200 which is controllable. Been using this around 18 months and paying off in full end of month - around £50pm used to show I am using it to build credit rating
  
• Took another card again to build credit - Vanquis this time again at £200 - similar scenario as above.
  
• In the space of 18 months one cards limit has been raised to £800 and the other to £1250 giving over £2000 in credit and I decalred I was unemplyed and on benefits so nothing witheld from them at any stage
  
• Bank contacts me today, all that goes in is £640pm which is HB and ESA - HB paid out for rent so only left with £240pm for everything (luckily I live at home) and they have given me a £100 overdraft - again, when made redundant and IVA situation bank was fully aware of all issues.
  

Now, do you think this is responsible lending? I don't.

I know being on benefits with no assets or savings there is not much they can do to me apart from a small token payment per month if I was to spend the lot

- I wouldn't as I learnt my lesson from the IVA and want a clean record for WHEN I am employed again

and may need larger loans but I could go and whack the whole £2k and not really worry about it

- they may see it as fraudulent activity with no means to pay but if someone was to pay minimum amounts for a few months and

then say "I am finding my payments difficult" what could they actually do? Nothing.

 

I am just thinking out loud and also wondering why these companies wonder why they get turned over so much - yes the APR is high but if someone maliciously goes out to spend the credit and have no intention of paying it back what can be done? They cannot attribute benefit payments to credit payments can they?

[citizenB]

Both the credit cards you mention are IMHO no different to taking out a PDL, only over a longer period of time (depending on whether you just repay the minimum)

 

So I am guessing that, if someone shows they can manage this level of high interest, then they will only be too happy to provide a higher limit. Responsible - I agree not very.

[Conniff]

Agree with the above. Those cards are a con, they will not help mend your credit record or give you a higher score, if anything a respectable lender would look at that and conclude that you are using these rip-off rate cards because you can't get anything else so are a bad risk.

 

 

They are just costing you extortionate amounts of interest each month, money you could be better spending elsewhere.

[honeybee13]

essexmat, have you looked at credit unions?

 

http://www.consumeractiongroup.co.uk/forum/showthread.php?396633-Credit-Unions-an-alternative-to-payday-loans&highlight=credit+unions

 

HB

[essexmat]

Not paying ANY interest as I pay off in full before next statement is due

[essexmat]

essexmat, have you looked at credit unions?

 

http://www.consumeractiongroup.co.uk/forum/showthread.php?396633-Credit-Unions-an-alternative-to-payday-loans&highlight=credit+unions

 

HB

 

Thanks, will take a look

[Lapsed Workaholic]

Not sure whether or not you are seeking advice on how to get into debt or how to keep out of it.

[citizenB]

Not sure whether or not you are seeking advice on how to get into debt or how to keep out of it.

 

I think the point essexmat is trying to make is requiring clarification on, is that whilst he did have good credit because of good employment, salary, etc. There came a time when he was unable to work - defaulted on credit entered IVA and is now reliant on benefits.

 

After this, he started to rebuild his credit for when he is employed again... however his musing then took him to the fact that despite the downturn in his finances, creditors are starting to throw credit at him again.

[Lapsed Workaholic]

I thank you for the clarification CitizenB. It is as I had deduced myself. What I find difficulty with is musing on an eventuality that cannot come about unless he himself succumbs to the temptation of getting himself into a position that he has already had experience of and is better placed than most therefore to both advise on and to resist.

Nor am I convinced of the efficacy of putting one's self at the mercy of creditors for small amounts in order to make it easier to put one's self at the mercy of creditors for larger amounts at some point in the future should circumstances change. Planning one's financial affairs on the supposition that something will turn up has the ring of the Wilkins Micawber school of financial management.

I would be grateful if you could explain with equal clarity for the benefit of anyone who may be tempted towards profligacy what recourse one's creditors would have if one did happen to succumb to getting into debt to them amounting to more than could possibly be repaid, and how one might be able to survive it.

[citizenB]

I thank you for the clarification CitizenB. It is as I had deduced myself. What I find difficulty with is musing on an eventuality that cannot come about unless he himself succumbs to the temptation of getting himself into a position that he has already had experience of and is better placed than most therefore to both advise on and to resist.

 

Nor am I convinced of the efficacy of putting one's self at the mercy of creditors for small amounts in order to make it easier to put one's self at the mercy of creditors for larger amounts at some point in the future should circumstances change. Planning one's financial affairs on the supposition that something will turn up has the ring of the Wilkins Micawber school of financial management.

 

I would be grateful if you could explain with equal clarity for the benefit of anyone who may be tempted towards profligacy what recourse one's creditors would have if one did happen to succumb to getting into debt to them amounting to more than could possibly be repaid, and how one might be able to survive it.

 

TBH, after the last 6 years where credit has wrought so much grief to people and certainly anyone who has found themselves in a situation as did essexmat and many of our members.. if those same people were to overstretch themselves again, then they would only have themselves to blame.

 

Whilst there is a Lending code and PDLs, hopefully are being taken to task in respect of irresponsible lending. IMHO, there has been sufficient notice that taking on large credit amounts is foolhardy.

 

It is no longer safe to assume that employment is secure - consolidating debts is not a wise move as many caggers will confirm. So people need to learn to budget properly and think carefully before borrowing if they know they will not be able to repay it if they lose their income !

[Lapsed Workaholic]

TBH, after the last 6 years where credit has wrought so much grief to people and certainly anyone who has found themselves in a situation as did essexmat and many of our members.. if those same people were to overstretch themselves again, then they would only have themselves to blame.

 

Whilst there is a Lending code and PDLs, hopefully are being taken to task in respect of irresponsible lending. IMHO, there has been sufficient notice that taking on large credit amounts is foolhardy.

 

It is no longer safe to assume that employment is secure - consolidating debts is not a wise move as many caggers will confirm. So people need to learn to budget properly and think carefully before borrowing if they know they will not be able to repay it if they lose their income !

Not tongue nor pen could better tell

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