Will consolidating personal loans result in a mark against my credit?

Babylegs

Hi! I have two personal loans with the credit union totalling about 30k. Because they're two loans the repayments are high so I asked them about combining them into one which would lower repayments. They said they could but they'd have to alert the credit bureau and it would essentially be looked at as though I had difficulty paying my loans. The reason I care about this is I want to apply for a mortgage next year. I've looked at Avant Money but they don't want to give me a loan and won't really explain why (I have the repayment capacity). Does anyone know if this would affect my ability to get a mortgage and maybe I should just continue making rhe higher repayments? Thanks

My advice would be not to do anything that might affect negatively impact your credit history as it could very much affect your application for a mortgage. I’d take on board what the credit union advised, it would likely overall be in your better interest to continue with the two separate higher repayments.

https://www.centralcreditregister.ie/borrower-area/apply-for-your-credit-report-and-other-rights/

As you were refused a mortgage it might be no harm checking your record on the Central Credit Register.

Babylegs

I thought so. It seems mad to me that it has to be like that, surely it makes sense to make your finances as efficient as possible! Anyway thanks for the reply :)

coylemj

Because they're two loans the repayments are high so I asked them about combining them into one which would lower repayments.

Will the proposed consolidation involve extending the term of one of the loans - the one that was due to be paid off first? Otherwise, I can't see how consolidating two loans can reduce the the repayments.

They said they could but they'd have to alert the credit bureau and it would essentially be looked at as though I had difficulty paying my loans.

If the CU is prepared to consolidate the loans and you continue making repayments in accordance with the terms of the (new) loan, what is there to report? People consolidate loans all the time, it doesn't follow that they are having 'difficulty' making the repayments.

Babylegs

Yes it would mean making the term longer on one of them so I think that's where it comes in. If I didn't extend the repayment time it wouldn't be worth doing really

Jim2007

https://www.boards.ie/discussion/2058271200/will-consolidating-personal-loans-result-in-a-mark-against-my-credit

Yes the restructuring of a loan is an even the the CU must report to the CRR and would normally be taken as an indication of someone in financial difficulties. However, you do have the possibility to add a note to the entry with the CRR, explaining why you did this. So if the loans are for a major capital item such as home extension, third level education etc... it might be possible to explain it away as good financial management.

On the other hand if the loans are for what might normally be considered living expenses - holidays etc... they will be problematic in any case, so it may not make any difference to the outcome of a mortgage application.

Babylegs

They were for a car and some minor home improvements