Don't know where to start...

Kellan_2

Hi there, I am 31 and in around £20,000 of debt. It's ruined my credit rating, and was mostly from when I was very young and foolish.

I'm now in a situation where I desperately want to rebuild my credit. (Noddle states my rating is 1/5- not good). I'm self employed too, which doesn't seem to help in my applications, as I'd like a proper bank account (currently Halifax Easy Cash).

No one is chasing me for money, apart from the odd letter from an old catalogue debt of around £180. I earn around £1400 per month, if that helps. I am paying a couple of creditors back at around £10 each.

What I would like to know is my best course of action moving forward, to rebuild my credit. My options are pay it off little at a time as I'm doing, but it will never be paid off, an IVA or something like that, or beg for the debt to be written off. Part of the debt is for an £11000 loan and £5000 overdraft both with Nationwide. They have not been in touch for around 4 years, at all. I don't want to contact them and start up something, if that makes sense.

Would love some advice. Many thanks,

Killan (31/f)

Vikipollard

You would be as well to complete an SOA (statement of affairs) so that the complete picture can be seen.

From the limited information given, I can't see that you can begin to rebuild your credit worthiness until you have a handle on what you owe and to whom. Am I right in thinking that you have arrangements to pay in place with at least some of your creditors?

You also talk about applications - were they just for bank accounts, or have you been applying for credit?

(Oh and your 'rating' is a made up number from the credit reference agencies which no lender or other financial institution actually sees )

fatbelly

You may find that, having done a credit check, your creditors will now get in touch.

Did you find everything listed on Noddle that you expected?

I agree - do a soa (link to calculator) as the amount of available surplus monthly cash, together with debt total, will largely dictate the best option for you.

[Deleted User]

Think long about a 'debt solution' it lasts a looonnngg time, it is probably easier to let sleeping dogs lie if you can

Only this week I was told by the Halifax, seems my once Easy Cash upgraded account to the Reward account would never facilitate an overdraft, ahh very kind, and at very worst acted as if my now current account, contactless debit card (the works) didn't even come with OD function - bless them!!- so you are probably best moving to get a proper bank account if anything.
4 years and no mis-management and good conduct, clear to see, with this bank didn't mean a thing, except being spoken to in a 'simple' way shall we say, because they have probably classed me from the 'Easy Cash' days, wouldn't have minded but I got to the pre-contractual stage so guess I'll always live in hope but I don't think any bank is what they use to be :cool::o

Just my 2pence, it doesn't pay anymore to do the right thing!

Swampy3k

Hi Kellan, well done on having what you could undoubtably call your 'lightbulb' moment, MSE is an invaluable tool for helping you on your journey, anything from helping you cut costs to moral support, I would suggest you start a 'Diary' to let yourself and other see how far you've come in the months ahead. But be aware this is a long process your embarking on however credit to you for dealing with it instead of burying your head in the sand.

as others have suggested, an SOA would help (link above) also speak to the Citizens Advice, they may be able to point you in the right direction, also if you are looking to budget money in an effort to make more to payments then a few folk rave about 'You Need A Budget' (YNAB). all these could help you spring clean your finances.

Afterall I am of a similar age but have a larger debt amount if it weren't for MSE i'd still have my head stuck in the sand. All the best on your Journey

Kellan_2

Thank you all very much for your replies. I will do an SOA. However, I won't have much over to go towards debts. My problem is, I don't want to be paying a minimal amount every month, and be stuck with this debt for the rest of my life. It's just going to be a waste of money and only going to be tickling the interest.

Is it worth me writing to my current creditors and asking for the amount to be written off? They're relatively small amounts, around £100-400 for the letters I'm receiving.

Also, what do you suggest I do with the Nationwide account? (£5k overdraft but don't use that account anymore and £11k loan). This company has NOT contacted me AT ALL for around 4 years.

Many thanks again for all of your help, it's most appreciated.

twiggy86

Hi Kellan

The point of an SOA is so that you can see exactly what you're spending and where. And the us helpful folks will try and point out areas that you could get back on, i.e. groceries is normally fairly easy to cut back on with the help of a meal plan and a shopping list. Then once you've cut back you may find you have more than you think to pay off your debts. I find the daily "small things" thread extremely helpful, it is amazing what little changes you can do which may only save you a few pence, but when you do a few of those things daily it does add up eventually.

I'm not sure what happens to debts once they're "written off" but if they're small amounts, you could focus on paying them off first and then focussing on your other debts.

fatbelly

Kellan wrote: »

Is it worth me writing to my current creditors and asking for the amount to be written off? They're relatively small amounts, around £100-400 for the letters I'm receiving. .

They probably would not do this. I thought no one is chasing you for money, apart from the odd letter from an old catalogue debt of around £180. It would be an odd thing to do with creditors who are not chasing you - to wake them up in order to ask for a write off!

Kellan wrote: »

Also, what do you suggest I do with the Nationwide account? (£5k overdraft but don't use that account anymore and £11k loan). This company has NOT contacted me AT ALL for around 4 years.

Did they appear on your credit report?

pennystretcher

Like mentioned above, get the SOA here.

When I decided to get on top of my finances, I read somewhere that as a rule of thumb, third of your salary goes to rent/mortgage, third for essentials like gas, water, council tax heating and food and the last third is for everything else - in your case should be the debts..and once the debts have been paid off then you can actually start building savings/pension etc. Remember to keep a rainy day fund handy though!

ps. getting debts written off - think about this twice before you try this as I'm pretty sure it will affect your credit rating. Without knowing if you might want to get a mortgage in the near future you have to keep that in mind too.

fruitisbad

I had a poor credit record. I got a Barclays cash account (no credit checks, virtually guaranteed to get it) and paid all my wages in (similar amount to you).

Within about 6 months they offered me a Barclaycard with £150 balance.

That was increased to £300 after about 3 months (without asking) and recently went up to £700 (at my request). Everything paid off in full every month.

My cash card account has just been upgraded (without asking) to a regular bank account.

I can only assume that is based on my salary going in every month as my credit history isn't great. They see my bank balance which other lenders don't which is most likely why they offered the barclaycard.

So I went from only having an old nationwide savings account cash only, to a proper bank account and a credit card that's enough to book hotels for work etc. on in under a year.