fixing/rebuilding credit

OldDebtProblem

hi,

a few years ago I got a bank of Ireland credit card and stupidly racked up about €1,000 debt.

the balance at the minute is €1,155.

I guess my question is how do I go about getting it sorted out and the credit record in good standing again?

sorry if it’s a dumb question but I’ve never had the issue before and not sure of the best course of action. The card is obviously revoked and no longer active either

coylemj

See if you can get a term loan (with a repayment schedule you can manage) from your bank or credit union to settle the balance. The interest rate charged by credit card companies is exhorbitant. If you haven't managed it by now, you may never be able to pay it off, unless you can get an alternative source of finance at a lower rate of interest.

OldDebtProblem

https://www.boards.ie/discussion/comment/121245173#Comment_121245173

To be totally honest, I have not really tried either.

Paying it back I can manage and I’m sure the bank will take a repayment arrangement but I am mostly just unsure if it would make a difference to credit rating in future?

Will having an old debt that’s repaid look as bad as having a debt to begin with?

OldDebtProblem

My hope from all of this is basically pay the €1,000 debt and get a loan of a couple thousand from bank to sort out some household expenses (need a few new appliances due to age etc).

I can afford to pay back a loan but due to the credit card thing I can’t get one, but if I paid back the €1k and still would have no chance of a loan I’d be inclined to just leave it til next year some stage when I’ve got more freedom to move.

regardless I want to pay it back, asap, but I’m just not sure what’s the best way to go about it.

coylemj

Did you pay the minimum amount stated in the last credit card statement?

Jim2007

There is only one way fix your problem and that is pay off the debt. Outstanding debt will remain on your CCR report until it is settled. And once settled it will take time for it to disappear from your report.

If you have the money or can borrow it interest free from parents or a relative then pay it off now. Otherwise perhaps you can do as @coylemj says above.

Fann Linn

Everyday you bury your head it will still be racking up interest. Get an arrangement in place, stick to it and try to rebuild your CCR.

Good luck.

This is it

It will remain on your credit report for 5 years after you finish paying it. Most banks won't lend with credit issues, and probably none with current/very recent credit issues.

If it was me I'd pay off the card, open a credit union account, save for a few months and then try for a loan

OldDebtProblem

https://www.boards.ie/discussion/comment/121245658#Comment_121245658

Thanks Jim.

Yeah I’ll give BOI a call and discuss options with them. I wouldn’t be wrong to imagine that if they were to offer a term loan to repay, that in itself would help the credit rating situation? Presume a positive history of paying back that loan would be good even if it’s a restructured debt?

Would I be best to visit my local branch or calling the card team one and the same?

Cheers

G_R

https://www.boards.ie/discussion/comment/121245953#Comment_121245953

There's a dedicated arrears team you should contact, phone number is 0818 200 334.

It will look good that you dealt with it, but it will still show on your credit report for 5 years after you clear it, and you will likely find it difficult to access credit until it falls off. As mentioned above, once the issue is sorted, the credit union may be your best bet if you build up some history of savings history with them, they will probably be a bit more forgiving than a bank.

Jim2007

https://www.boards.ie/discussion/comment/121245953#Comment_121245953

There is no common credit rating system, there is the CCR which banks are required by law to report certain events that occur in the life of a credit product under certain conditions. Such as a default, a write off, variations that arise in situations where the borrower is unable to meet the conditions of the original loan and so on. Their website sets out the rules for the various events under which the financial institutions must report.

So the officially available information to all financial institutions in the EU is a list of the negative events, positive outcomes are not recorded. Banks build their own computer models on top of this and take into account a whole lot of other information in order to make a decision. Hence one bank may turn you down and another may accept you.

Once you settle your debt it will take around five years for the entry to disappear from your CCR report. But while that will be considered as black mark it may not prevent you from getting a loan, because as I said they will take other factors into account and that may be in your favour - the type of credit needed, your profession, location, current salary, savings, having assets to pledge, someone to go guarantee and so on.