Affect of full and final settlement on Credit Score

Tridale

Hi all,

I have been paying a debt management plan for almost 3 years, total debt was originally almost £22,000, it's now down to around £10,000, and I have around 2 years left to pay on it. For the 1st 2 years I was paying £350 per month, last year I put it up to £450 per month, as I am now earning a bit more.

My parents have offered to loan me a lump sum to make a full and final offer to my creditors, which at first sounded like a good idea - if I could settle for around 75% it would knock around 7 months of payments off, and the debts on my credit file would be cleared 2 years earlier.

My main concern now though is in the next few years my partner and I were hoping to look at buying a house, and I've read that if you settle for less than the full amount owed, they put "part payment" on your credit file, which stays there for 6 years, and this is viewed by some lenders as been as bad having a CCJ or Bankruptcy.

Would anyone have any idea how a f&f payment will affect my credit score, (Although it's not the best now I have never missed any payments on my DMP, or on any debts before starting my DMP) and how will this will affect the chances of me getting a mortgage if I wanted to go get a mortgage in 2-3 years time?

Any advice appreciated.

Thanks

Dale

bottleofred

Hi Dale,

As you have been in a DMP, I'd be surprised if you don't already have defaults on your credit file from the debts that you've been paying off. Defaults stay on your credit file for a total of 6 years from the time they are applied before dropping off, but I'm not 100% sure that partial settlements do. Partial settlements go onto your credit file as exactly that and while the companies you partially settled with probably won't want to lend you money again, it doesn't mean nobody else will. Hopefully somebody with more advice than me can advise about the length of time the partial settlement stays on your file.

Good luck

Red

Conan_the_librarian

If you have defaults already (which you probably have if you're in a debt management plan) from a few years ago then these will drop off your credit file 6 years after the date of the original default.

Whether you settle in full or make a partial settlement doesn't make the defaults stay on there any longer, they'll simply be marked as 'settled' or 'partial settlement'.

leedsads83

Hi Did you find an answer to this?

I am currently in a similar situation to this. I underwent a debt management programme a few years ago and have now come into some money so i can pay them off.

I'm looking at trying to get a mortage and although there are defaults on my account are looking at a lender that ignores them if they are over a certain age. What i need to understand is if debts showing partially satisfied rather than fully satisfied would have an effect?