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I've recently started employment after being unemployed. How long should I wait until I make a loan application?

by steeviouk 05 July 2010 |

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My situation:
I have recently started a new job (14th June) after spending some time unemployed, claiming benefits.
My status with the bank was set as 'unemployed'. This has now changed, with my employment status confirmed.

My credit rating is unblemished, my score is good (though, I suspect/hope this will become 'excellent', since I have just paid off a credit card bill).

I get paid weekly, gross £400 - which will likely rise next week - by company cheque, with no other debts or major outgoings.

My question is:
Is there a recommended time I should I wait before I make an application for a loan of approx £8,000?
If so, how long and what sort of issues will I face?

Thanks in advance for your advice.

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2

Gubstar posted
Wait as long as possible. Try and make do without whatever your going to spend the money on, you have done for this long.
Instead put a little amount of that salary away in a regular savings account. Build up the amount and buy the item cash. Much better than getting into debt and paying interest.
Posted on 05 July 2010 | Love 1 love Report
881

MikeGG1 posted
You have managed to stay out of debt while unemployed and as soon as you get employed you want to get into debt. And where is your safety net? How would you pay for the loan if you lost your job?
Everyone on this site will confirm that getting into debt is a mugs game. Please save up for what you want to buy. At least wait until you have half of the money. Often people realise while they are saving up that they didn't really want what it was that they were saving for.
Meanwhile save what you can so that you have a good cushion. These days it is best to have 6 x a single income or 3 x a joint income in case of redundancy. A good way to save is a 12 month fixed rate monthly saver for which you should be able to get at least 4.5%.
Once you have that cushion you can start to think about spending.
Mike
Posted on 05 July 2010 | Love 1 love Report
174

JoeEasedale posted
A word of caution about your credit card. If you paid it off and closed it then your credit score will get worse if you are not using any credit card at all. You don't have to pay any interest, so long as you are using a card at least once a month and clearing the balance. That will keep your credit rating up, whereas no card at all, will pull it down.
I also echo the others. Try to do without debt if you can. Put away some of your wages every month without fail and build up your savings. A cash ISA is the best place to start. Use an instant access one so you can get at the money if needed.
Harder times are coming, being debt free will be very good for you if you can manage to wait for what you want.
Posted on 05 July 2010 | Love 1 love Report
414

manzanilla posted
Why do you want to borrow this money? How much are you planning on repaying each month for this loan?
manzanilla
Posted on 05 July 2010 | Love 0 loves Report
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steeviouk posted
Hi guys, thanks for the answers.
Let me clear up a couple of issues...
About a year ago, I lost my job and had some expenses come up.
My brother offered to take out a loan of £8500 for me, which he transferred to me, so I am already in debt, albeit via him.
I pay him the monthly payment, every month, a few days before it is due from his account.
I used this money to get myself back on my feet and to pay for aforementioned expenses, aswell as training etc, to get myself back into work asap... it's obviously been a lot harder than I had imagined.
What I want to do, is to take out my own loan, solely out of respect for my brother to clear it from his name and transfer it to mine.
I think there is still approximately £7500 remaining on the loan.
At the risk of sounding foolish and presumptuous, the job I have is with a family member and is rather secure to say the least.
My brother has no real necessity to pay the loan from his account, but naturally, I just want to remove the burden from him asap.
:)
Posted on 05 July 2010 | Love 0 loves Report
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steeviouk posted
I plan to pay approximately £250-£300 per month, over about 36 months, if possible.
Posted on 05 July 2010 | Love 0 loves Report
414

manzanilla posted
Respect :)
It's good to repay all debts, but especially family ones.
re your original question, check your credit rating on experian (sign up for their service and make sure you cancel it within the first free month!). Then if that is looking good, I woul apply after 3 months in the job.
If you have more than one credit card with little or nothing on them, consider cancelling all but one, so you have a lower amount of credit open to you - that may help with the loan application.
I hope the new job goes well
manzanilla
Posted on 05 July 2010 | Love 1 love Report
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steeviouk posted
Thanks manzanilla.
I already have a membership on Experian.
As of the last update on the 6th June, my credit report is unblemished, with the sole amount of about £400 owed on a £500 limit credit card, which I have since paid off. That is the sole debt that was to my name. On June 18th, my score was 953.
Of course I'd like a longer term solution to this, so all the other advice would be ideal for me, that is if I had the choice, but my priority really is getting the loan removed from his name.
3 months seems to be the sort of timeframe recommended.
Thanks for the well wishes :)
Posted on 05 July 2010 | Love 0 loves Report
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manzanilla posted
ok, make sure you use the credit card each month and pay it off in full each month - that is better than not using it.
And cancel that experian membership - what a waste of money! :)
manzanilla
Posted on 05 July 2010 | Love 1 love Report
881

MikeGG1 posted
It sounds as though you have a lovely brother to have taken out the loan for you.
I would talk to him about it. The problem with repaying loans early is that they would want to make the same profit so charge a penalty for early closure to compensate for the loss of interest. If you tell him that, he will probably say that you should leave it to run its course.
Set up a standing order to make the payments to him so that he has the money for value (which means that6 he can draw on it without waiting for clearance) 3 days before the payments are due to allow for weekends.
Your credit score will only be excellent if you regularly use a credit card and repay it on time. The biggest misconception about credit scores is that people think it is about how creditworthy they are. That can't be measured. What the score is is a measure of how people handle debt.
Mike
Posted on 05 July 2010 | Love 0 loves Report

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