partial vs full settlement and credit rating

zqo93w

Hi all,

First post so please be gentle!

I wanted so easy advice on settling debts and how it affects credit rating.

Long story short, my wife has a debt management plan in place for various debts amounting to about 7k.

We recently were approved for a mortgage ( in my name only) and I should have some money left over so that I can pay these debts off, hopefully never to occur again.

Now...Obviously I would like this to cost as little as possible...then we can spend some of the money on doing up our new house as it needs some work.

She has been advised by her debt management company that paying off the debt partially will look worse on her credit record ( we would like her to be added to the mortgage one day but at present her credit rating isn't good at all, so didn't even try and get her on the mortgage).

What I'm wondering is, surely her credit rating is bad enough anyway due to the debt management plan and will he for several years to come regardless of what action she takes?

Obviously I'd rather pay off 3500 than 7k. Any advice folks?

rizla_king

if theyre defaulted her credit file is as screwed as it can get short of going bankrupt

some holier than though posters here will try to convince you that finance companies pay attention to partial marker, or that you should pay it in full just in case you are dumb enough to want to try for credit with a company you owed previously. its bull though and you should do whats in your best interest to get debt free soonest.

Thrugelmir

Is your wife providing some of the deposit for the house purchase.

Thrugelmir

rizla_king wrote: »

some holier than though posters here will try to convince you that finance companies pay attention to partial marker, or that you should pay it in full just in case you are dumb enough to want to try for credit with a company you owed previously. its bull though and you should do whats in your best interest to get debt free soonest.

Up to people to make own their beds to lie in. Every action has a potential consequence. So people need to think carefully. Who is being defaulted on being a major factor in the decision,

zqo93w

Thanks for the responses thus far folks.

No she isn't providing any deposit, I'm getting a buyout of inheritance so wanted to use some of that to pay off her debt. We anticipate that it will be a fair while regardless before we can get her added to the mortgage. In fairness her financial management these days is much better, the debt is from when she was younger.

downhillfast

The advice you require is very much dependent on her current credit report situation...

You say the debts are from when she was younger... if the debts were defaulted a while ago then negotiating a partial settlement may be a good thing as the entire entry regarding that debt will fall off the report 6 years after the default date - so the settlement/partial settlement won't be visible anyway.
If the debts haven't been defaulted or are relatively recently dated then any settlement or partial settlement will be on file for longer... potentially 6 years from the settlement date if the debt does not have a default but instead has an 'arrangement to pay' marker.