Having to postpone DMP 😞

spooney7

Hiya 😊

I'm hoping to get some advice. Me and my partner had a falling out with the lady we rented our last house from. Right now we're staying with family and all going well, we'll be moving into our new place tomorrow.

Although we have no issue affording the rent, the letting company still asked for a guarantor because of my credit card payments- I have about £7000 of credit card debt, partially from uni but mainly from previous bad financial choices. I make the minimum payment every month, but as I am on minimum wage, paying it all off is likely to take quite some time.

My partners mother is our guarantor which we are so grateful for, however she is understandably concerned about being a guarantor for a long period, i.e. years. Because of this, the letting agency has agreed to a review at around 6 months into our tenancy, with new checks where we submit more bank statements.

Because of this, I can't go ahead with my plan to enter a DMP once we are settled in the new house, as this would adversely affect my credit rating and could cause problems for the review. My partner suggested calling the credit card companies directly and asking about freezing interest temporarily which would allow me to pay more off a lot quicker. However, I am assuming that this would also affect my credit rating badly.

Does anyone have any experience of doing this, and if so, how did it affect your credit rating? Also, does anyone have any other suggestions to boost credit rating?

Thanks in advance!

sourcrates

Hi,

How did the letting company find out about your credit card debt ?

The only information they are normally privy to, is the public information section of your credit file, they will not have access to any financial information.

There are lots of people on this forum, in DMP's, that rent property without the need for a guarantor ?

glentoran99

they would see the credit card payments from bank statements would they not?

spooney7

They did credit checks, and also saw the payment details on my bank statements. Apparently they were concerned at the amount of money I have left over after paying my monthly payments.

FireWyrm

How did they see your bank statements? I can understand being asked for a credit check, but bank statements too is just plain impertinent and I would have told them to swivel on such a "request". It has absolutely no basis in law. Your personal finances are no concern of theirs beyond a basic public credit check...geez, not even banks ask for this when applying for a flipping loan for gods sake.

spooney7

This is my first time renting with an agency, I thought that it was a standard request. The annoying thing is, we passed all our credit checks and they still wanted a guarantor.

The rent is 525 a month, and with the bond, first months rent, application fee plus a guarantor fee, we've payed nearly 3 times that. Surely that proves we can pay?

sourcrates

spooney7 wrote: »

This is my first time renting with an agency, I thought that it was a standard request. The annoying thing is, we passed all our credit checks and they still wanted a guarantor.

The rent is 525 a month, and with the bond, first months rent, application fee plus a guarantor fee, we've payed nearly 3 times that. Surely that proves we can pay?

You see you arnt oblighed to share any personal information with anyone, of course they may of declined you if you had refused, or they may not of, without seeing the small print, it's all conjecture.

It's a difficult situation for you OP, I cant really offer you any advice on the DMP side of things, as it would impact your rental status.

bearcat16

Tricky one. It's true you are not obliged (legally) to show bank statements etc, but neither are they obliged to let the house to you.

In other words, if you're asking for credit from someone, they can ask for whatever they want and you have to provide it if you want the credit, so I sympathise with the OPs position.

Your partner's suggestion to contact the card companies directly about freezing interest will probably result in them registering a default on your account which will wreck your credit rating instantly.

In fairness, this will probably also happen when (or if) you start a debt management plan, which leads me to my next point...

£7,000 is not a huge debt, and I'm not sure a DMP is really necessary?

Remember, entering into a DMP will have a long term negative effect on your ability to borrow, including things like mortgages. Sure, if someone is struggling with unmanageable debt, DMP might be appropriate, but I don't get the sense that your situation is this serious. I'd be very surprised if a debt charity advised a DMP for just £7,000.

You say your credit is currently good, so could you instead transfer the balace(s) to a new 0% interest credit card? There are plenty out there with interest-free periods of about 3 years. (Eg MBNA, Virgin Money)

If you did this, your minimum monthly payments would only be 1% of the balance, so £70 per month. (I'm basing that on Virgin and MBNA as I have those cards and know that the minimum payments are both 1%. Other cards may be different). You can even spread the balance over more than one card if necessary, the effect will be the same.

In my opinion, this would be preferable to a DMP (which to me would be a last resort).

This would give you room to breathe and your credit rating would be fine. You could also pay more of the debt as and when possible in the three years, as credit cards are flexible.

Just a slight word of caution: if you only paid the minimum amount for the whole 3 years, you'd still be left with a balance of about £4,600 when the 0% ends. So you should put in place a plan so that you can make more than the minimum payments and clear the balance completely before the 0% rate ends.

Just my opinion, good luck whatever you decide!