Help to get me out of 'bad' credit hole!

suzieham

Hope this is posted in the right place, apologies if not!

I need some advice on how to get me out of a bad credit hole.

I have debts of £4,600 and originally started with £8,000 - I originally started to pay these through a debt management company (wrong I know!) and realised that as my partner was contributing to paying off my debts and 2 payments were issued, I was being charged 2 lots of their management fee.

Anway, I am paying a substantial amount each month to clear this and hope to have this clear by August 2010.

I have signed up with Credit Expert and have been using this for some months, but have noticed that I have 33 missed payments logged on my file and a default with Capital One, for the original amount of £200 (This is now £68). The debt management agency take no responsibility for ensuring that dates of payments were met, and therefore paid when they felt like it, ( I understand that I should have taken more responsibility but was assured that this was all in hand).

I therefore have a very poor credit rating, and I am wanting this time next year to get a mortgage and my partner and I to have our own house. We have been renting for 5 years.

I just wondered if there is anything that I can do to help clean my credit file, I am now taking more responsibility for this and making every effort to ensure that higher payments are made and on time.

Frozenace

Might be worth while calculating your SOA.

I'm not a credit expert, but any missed payments will stay on the file for a while?

Might be worth talking to debt management company and telling them that they are NOT managing your debt the way it's supposed to be managed and try to clear the debt with Capital One?

Btw. if you're paying the debt management by direct debit, there's a thing called direct debit guarantee...

Tixy

Hi Suzieham and welcome

Well done on clearing so much off your debts already.

Are you still with the commercial debt management company? or are you now doing your own debt management plan?
If you are still with the company charging fees I would suggest you cease your agreement with them and either do your own DMP or use a charity organisation which will give you the same service (well actually hopefully a better service) without charging you any fee.

Payment history stays on your file for 3rolling years (I think) and other items (debts, defaults, CCJs etc) stay on your file for 6years.
This is an article about improving your credit file - http://www.moneysavingexpert.com/loans/credit-rating-credit-score which you may find useful.

Whether you can improve your file in a year enough to get a mortgage in a years time I am not sure, whilst the late payments are not great to have on your file, they are not as bad as defaults or CCJs - what is the date of the capital one default? Do you have any other defaults showing?

If the capital one is the only default then if possible I would focus on clearing that balance as soon as you can, which will then at least show the account as closed by the time you are thinking of applying for a mortgage.

misspoppy

HI

By entering into a DMP you are in default as you are not paying the correct amount to the people you owe, all DMP's damage your credit history and it will take a while for your to be able to improve this once your DMP has ended. You would end it sooner if you weren't using a fee charging firm as all money you paid to your DMP would go to paying off your debts.

gfplux

Hello suzieham,
Welcome and well done so far.
Sorry to be a little harsh - Debt normally comes by spending MORE than you EARN. That is you are living a lifestyle you can not afford. We all know that but sometimes we can not see the wood for the trees. If you want to get out of debt you have to change that habit today.
So the big question is are you now spending within your income?

Why not make out your SOA and post it here.
(link - http://www.makesenseofcards.com/soacalc.html ) This will automatically total the numbers. It can be saved (see the help) and you can change it every day if you want. When making out your SOA (Statement Of Affairs) try not to guess at the figures, dig out the paperwork! However remember a partial completed one is better than none. It is in fact one of the most IMPORTANT things you will ever do to start on the road to recovery. If you want a lot of help on this forum, posting your SOA is the first and most important step. After it is done it is very easy to keep it up to date. In my opinion everyone should have an up to date SOA even if you have little or no debt. It is a great tool to manage your life with.
If you post it on the forum answer the obvious questions before they are asked so you get immediate feedback, such as :-
If there is “other” Income explain what it is
Mortgage – interest only or not.
What is the age of any children.
Council tax is it over 10 or 12 months.
Electricity and gas any arrears.
Water rates meter yes or no.
Mobiles, how many and when are the contracts up for renewal.
If no contents insurance is it include with buildings insurance.
If pets cost money, what are they.
House or flat value, has it been valued by an Estate Agent and when.
The more that can explain about the financial figures and circumstances the quicker the post will get advise rather than lots of questions.
When you have posted it and it does not look right or you want to change it, do so and repost it.


Good Luck

suzieham

Thank you for all of your replies, I didnt realise there would be some much helpful information and people offering their own advice here.

I am no longer with the DM company as after 2 years down the line, I realised that paying them £70 a month, could have saved me a few months of debt payments.

Unfortunately I this all started when I was 20, 21 and 3 years on I realised that this was entirely my fault and I have learnt my lesson the hard way. It spiralled from family circumstance, when I had to find money quickly to have a roof over my head for me and my younger brother, and after you get accepted for one loan you start to apply for more and it gets out of control.

I thought that the DMP scheme would help me stop my spending and allow me to pay off the debts over time. As this started when I was 21 I didnt really understand the full implications of this, and didnt realise that I would be subject to a default and the late payments.

The default isnt in query, I failed to meet in Capital Ones eyes their minimum payment and I believe that the default only came about in the last year before I came away from the DMC.

My main issue is that I would like a mortgage, I have always been responsible for ensuring that all household bills and rent is paid on time and in full.

I am concerned that as I have these late payments and the default that when I am ready for a mortgage in years time I will not be able to get one, and will need to continue to pay rent for another couple of years.

I will need to find out the default date and also complete and post the SOA.

I think that I will need to except my fate that I will be renting for a few years before the default clears and the late payments reduce. I wish I could go back in time and tell my younger self not to get credit!!

Thanks again.

bozzy120

suzieham wrote: »

I wish I could go back in time and tell my younger self not to get credit!!

Ditto that!!!

Well done on your progress so far! I'm more of a lurker here but reading all the advice has helped me no end, I'm now halfway to being debt free!

suzieham

Amended based on my salary alone - and with added costs entertainment & clothing

Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 1402
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1402
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 312.5
Management charge (leasehold property).. 0
Council tax............................. 55
Electricity............................. 20
Gas..................................... 20
Oil..................................... 0
Water rates............................. 15
Telephone (land line)................... 15
Mobile phone............................ 60
TV Licence.............................. 6
Satellite/Cable TV...................... 11
Internet Services....................... 0
Groceries etc. ......................... 120
Clothing................................ 50
Petrol/diesel........................... 120
Road tax................................ 11.5
Car Insurance........................... 56
Car maintenance (including MOT)......... 19
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 12
Buildings insurance..................... 0
Contents insurance...................... 10
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 15
Haircuts................................ 0
Entertainment........................... 40
Holiday................................. 0
Emergency fund.......................... 50
Total monthly expenses.................. 1018

Assets
Cash.................................... 100
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 300
Other assets............................ 0
Total Assets............................ 400

No Secured nor Hire Purchase Debts[/B]
Unsecured Debts
Description....................Debt......Monthly...APR
Lloyds TSB.....................2602......140.......0
Barclaycard....................673.......70........0
Reliable Collections...........668.86....40........0
Littlewoods....................432.51....70........0
Iqor...........................336.33....51........0
Capital One....................118.43....50........0
Total unsecured debts..........4831.13...421.......-

Monthly Budget Summary
Total monthly income.................... 1,402
Expenses (including HP & secured debts). 1,018
Available for debt repayments........... 384
Monthly UNsecured debt repayments....... 421
Amount short for making debt repayments. -37
Personal Balance Sheet Summary
Total assets (things you own)........... 400
Total HP & Secured debt................. -0
Total Unsecured debt.................... -4,831.13
Net Assets.............................. -4,431.13

Nargleblast

A few suggestions - cancel the satellite and get a Freeview box. Make sure you use the car economically - not for trips less than 2 miles, do more than one errand on a trip out, drive around 55 mph on a run to get best use of petrol, make sure tyres at correct pressures. Mobile phone - try Pay as You go and see if £20 a month will do. Presents - check out charity shops, Ebay, Freecycle, car boot sales. Groceries - start planning meals and only buy what you need. Check out Old style Moneysaving forum for menu ideas etc.

Nargleblast

Also change your goal - first set a target date to get rid of your debts and take on the challenge on becoming debt free before that date. Only then make plans for buying a house if that is still what you want to do. There will still be mortgages out there in 2, 3, 5, 7 or 10 years time.

Tixy

Hi Suzie

Not sure if there is something a bit wrong on your SoA but it shows you have a monthly surplus of £740? This is a huge amount, if you really do have that much left over what do you spend it on?

If you don't know what you spend it on the I'd recommend a spending diary where you write down everything you spend for a few months (even just the odd 50ps etc). I see you don't have anything for entertainment or clothes, but even if you spend say £200 on this there is still another £500 unaccounted for.

You haven't entered any APRs - is that because all your creditors have frozen interest?

You could literally double your debt repayments or you start settling some of the smaller debts. You could clear capital one, iqor and littlewoods in the space of 2months.
You could even ask Capital one if they would remove the default from your credit file if you settle in full this month (it might not be that likely but it might be worth an ask?). That would make a big difference to your credit report.

I was going to suggest some areas to see if you could try to reduce your costs (groceries particularly) or whether you have shopped around for car insurance and whether you could rent somewhere cheaper - but these items are not major issues if you have a spare £500.