Advice request: high income, poor credit rating

Lenders will look at the overall picture - i.e. the amount outstanding and the rates charged on different loans. I don't think that the number of loans alone will make that much difference. It still makes sense to start with the highest cost loans and tackle them first. Consolidating higher cost loans into few lower cost loans over a term similar to that which remains outstanding now may also be another option.

dobsdave said:

First of all, sorry to go off topic op.
To the two responses to my question, I understood the logic of paying highest apr first,because in the long run you will have paid less but...
Payoff the lowest(Debt 1) debt first
Dont have to service that loan any longer
Free up extra cash for loan 2 etc etc
Would this also look better for possible lenders aswell? i.e. less loans and loans cleared as opposed to total amount of money owed?
Just a question, suppose it depends on the cicumstances.

Dave

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No, no, and no.

You don't pay anything to service a loan except the cost of the interest.

In the example above, you are only freeing up half the cash by paying off the lowest apr debt first than you would if you paid off the highest apr debt first.

Nobody gives you any credit for having a small number of debts. If you free up more of your monthly income from loan repayments (in terms of overall repayments) you will look better than if you have fewer bigger loans - credit rating looks at the overall amount of debt you have, not at the number of loans.

The idea is to get out of debt, not to make yourself look attractive to get new loans.

dobsdave, I suggest you look back at the example. What you are suggesting is a cosmetic action to make oneself feel better about the number of loans outstanding (I have fewer loans, therefore I am doing better), when what one should be focusing on is the amount of interest that is being paid on those loans and how to reduce that.

Is the KIPPER 23-year-old a help or a hindrance financially? If a hindrance, you'll need to convert them into a help!

I, also, wondered about the 23-year-old's position. If s(he) is still in university or vocational training or some kind might there be a contribution soon from that quarter to your joint commitments?

Attitudes are very different these days but in the 1960's the conditions set by my parents when I was offered a secondary-school scholarship at a time when few working-class kids had schooling beyond 14 was that I make (or pay for the making of) the school uniform and that I get paid work during school holidays to contribute to the slender family income. Shop and factory-work and fruit-picking were definitive experiences for my subsequent employment career.

Hi all and thanks again for your replies. The debate on which loan to pay off first has clarified my thinking enormously. I have firmly come around to the Clubman/Yoganmahew point of view whereas I would previously have instinctively veered towards Dobsdave's analysis.

Also, the KIPPER is half way to a PhD and picking up a little lecturing/tutoring en route. He had Sky+ installed and pays the bill. He also buys some groceries and treats his Da to the odd pint and an Indian! He does his share of household stuff, is a dab hand at DIY and looks after all his own expenses and I wouldn't expect any more from him. (He'll be a great catch for some lucky young one some day)