Will this cause bad credit rating?

Reginator

Hello All MSEs out there,

I'm new here, and new to the situation I am currently in. Which leads me to my question & hopefully the answer I am seeking.

It has been suggested to me that I contact my credit card company (HSBC visa) and suggest I make a good will payment each month, instead of paying the full monthly amount & interest.

It seems to me that this good will gesture would land me in some hot water with the credit card companies? And actually backfire long-term, by giving me bad credit.

Surely I would be a bad egg if I were to do this?

Could I rectify this bad egg label if I were, when feasible, to pay more than just the good will £1 per month?

I am in this situation (debt) due to being long term ill & have accrued a debt (credit card & overdraft), to make ends meet. I have no or little extraneous spending habits outside of putting food in my belly & a roof over my head.

Can anyone advise me on this? I do not want to limit myself in future, or have a bad credit rating because of decision I made to alleviate my debt. I have to pay my debt off, I take responsibility for that. But want to do it the right way for my future.

Thank you in advance for any & all help! It's appreciated & my future thanks you too! :money:

redpete

Not sure why you call it a 'good will payment' when I think you mean you will pay an amount that is less than the minimum amount they ask for.

If you don't make the minimum payment then they will add a charge each month you do it, and this will be noted on credit records and will be a Bad Thing.

Once such a mark has been entered it will not be removed just because you start honouring your side of the agreement at some time in the future - it is there as a record that you have had difficulty paying a bill, why should it be removed later?

You ought to contact pone of the debt charities that offer free advice so that you can get informed advice given your situation.

exel1966

This is the best advice anyone could give you.

Pay what you owe in full and on time and you'll be such a good egg !

Pay anything less and you'll be marked for the next 6 years.

Reginator

Thanks for replying - bit of you.

I completely agree that you use borrowed money you pay it back
straight away in full or as best as.

I don't think I made myself clear at all. So apologies.

I used the credit card, and was paying it of happily & steadily. However I have been long term ill without income other than housing benefits as I can claim jsa (I cannot work) & ESA (doesn't recognise my diseases or or treatments as debilitating enough not to work, though I would love to!). So I was advised to contact my credit card company & suggest I pay what I can which amounts to approximately £1 per month. Until I am back on my feet again.

I was told this type of arrangement is called a 'good will' agreement or payment. Between myself & the cc company. That way they know my intention is to still pay the debt, but currently I do not have the financial ability to.

However if I am given money for a gift or my birthday for example, I would put it towards the credit card on top of the 'good will' payment.

I'm not sure if I am being clear. But without a doubt I want that debt cleared, it's currently impossible to keep surviving until I am back on my feet.

But I do not want to go ahead with this arrangement if it means I will give myself bad credit. I don't want the debt to grow, but I don't have the money. So i'm stuck.

I wasn't sure if anyone has any advice other than what has been suggested to me. Maybe a way to approach the cc company that won't put me in bad credit? I think I might be dreaming!

happy_bunny_2

Best post this on the debt free wannabe board. You will get help there

molerat

There is no such thing as a "goodwill payment" it is a breach of your agreement and will at best be marked AP (arrangement to pay) on your credit file. The only thing that will not dent your credit file is a payment above minimum every month and on time.

Reginator

Thanks. I'll take a look at that thread & good to know it will create bad credit. I will speak with the person who advised me, sounds like he may not be too clear on this himself.

Thanks again.

Lith

i pay mine of the next day i use it i never go crazy on that card... HSBC CREDIT CARD interest will kill ya if ya not careful.

[Deleted User]

Lith wrote: »

i pay mine of the next day i use it

It means you won't improve your credit rating then. The only benefit you're getting from the card is the section 75 protection.

I'd recommend you wait until the statement so you can start getting some good usage history.

aimzrabbit

Reginator

not meeting the minimum contact each month will give you

1. a £12 default charge each month you fail to meet the minimum payment you will probably get a £12 late payment charge each month as well

2 . on your credit file it will mark as late payment

3 it will then go on your credit file if you arrange to have the interest frozen and they" agree" to the £1 a month as arrangment to pay AP

4 a full default notice will be served at 6 months ish this will be recorded on all 3 Credit references

any of the above will damage your credit worthyness with the default then possibly a ccj , with the latter 2 damaging for 6 years

mortgage mainstrem no chance
private renting nope
credit card subprime
mobile phone maybe
loan mainstream no chance

AdamJK_2

Given the circumstances you say then I think it's fair to say that any way you play this, your credit file is going to be wrecked for a few years. Not what you want to hear I know.

The best thing you can do is speak with the collections team, or maybe a better solution would be to write to them. I think you may be able to find some template letters on the debt-free board.

Set out what the issues are i.e. poor health and not working and see if they will freeze interest or at least offer preferential interest rate together with an arrangement to pay. Pay back what you can reasonably afford, and I'd suggest £1 probably isn't enough as it'll cost more to collect & process!

As for the usual replies of 'you borrowed it so pay it' fair enough I can see their point (I feel that way towards some posters on the boards) but at least your not sticking your head in the sand and trying to forget about it, but trying to deal with the debt. Kudos to you. Just bear in mind that any way you deal with this will more than likely prevent you getting credit for the foreseeable future - but that may not be a bad thing!