What is the best option for my credit file?

JonnyB0101

I have been struggling financially for some time and have missed a few loan/credit card payments in the last 12 months. In July I was advised to contact StepChange and since then having been using a Debt Management Plan (DMP) to manage my debts.

I currently owe £23,000 across one loan and five credit cards.

I have recently sold the property I own (which was in a different town as I rent elsewhere) to free up some cash and I have £23,000 remaining from the sale.

I desperately want to buy a property in the city I live in as I have a young family now and I know I won't have this kind of capital again but from a credit file point of you I don't know what to do.

Is my credit file already really damaged for six years due to entering into a DMP and paying off drastically reduced payments for the last five months? Or will paying everything else off now make my credit file clean again?

If the credit file is already really damaged beyond repair then I feel like I'd be more sensible trying to partially settle the debts and try to save myself some money.

Any advise would be appreciated.

Thrugelmir

The DMP will block your ability to obtain another mortgage. That's the reality of your situation. Your decision to pay creditors in full what you owe or if you make partial settlement arrangements. Will likewise potentially impact you in the years to come. As irrespective of your clean credit record , lenders may well maintain a record of your default.

Even clearing the DMP now will restrict your options for years not months.

JonnyB0101

Thanks for your reply.

Whatever I do I want to get rid of the DMP. I just want to know whether my credit file will look better if I pay all debts in full or if it's going to be really bad for six years anyway (because I entered into a DMP) in which case I figure I may aswell try and settle with partial payments and keep some money back for such a time as I can get a mortgage.

dumpyboy

JonnyB0101 wrote: »

Thanks for your reply.

Whatever I do I want to get rid of the DMP. I just want to know whether my credit file will look better if I pay all debts in full or if it's going to be really bad for six years anyway (because I entered into a DMP) in which case I figure I may aswell try and settle with partial payments and keep some money back for such a time as I can get a mortgage.

Get rid of dmp as soon as you can it will hurt you many years to come a lot more then 6 people keep telling me things do get better but I ve not notice anything if your people have put AR markers on your accounts the effects will last for many years with no end in sight the most evil markers divised

Thrugelmir

JonnyB0101 wrote: »

Whatever I do I want to get rid of the DMP. I just want to know whether my credit file will look better if I pay all debts in full or if it's going to be really bad for six years anyway (because I entered into a DMP) in which case I figure I may aswell try and settle with partial payments and keep some money back for such a time as I can get a mortgage.

Settling with creditors will at least mean that you're can then start afresh. Remaining in the DMP will defer this new start. Just don't expect a lender to offer you a mortgage if you only partially settle.

JonnyB0101

Thanks for the advice. I guess I have no option but to settle in full as quickly as possible.

Thrugelmir

JonnyB0101 wrote: »

Thanks for the advice. I guess I have no option but to settle in full as quickly as possible.

There's no easy answers. Making the most of the opportunity is down to you. As only you can decide the path you take.

JonnyB0101

Ultimately I want a mortgage - so I think what I'm hearing is that paying in full would be better credit score wise (although I appreciate I'll need to wait a long while).

Partial settlements might save me some cash to put towards a mortgage but it's pointless if I still can't get the credit for a mortgage anyway.