How long to repair credit?

Brum

Hi

I have also posted in budgeting and bank accounts regarding my circumstances, but do have a quick question here. My debt to credit cards (approx £5.5k) will be clear by next week. The APRs on them are frankly awful, so I'm going to close the lot down. My personal debt has been serviced bang on time for the last 3 years.. mostly with minimum payment, admittedly, but they have been serviced. My only credit issue is a couple of joint accounts that my ex-husband gave to a debt management charity without my permission to manage, meaning they are now in default, but the bank will not talk to me as the DMP is servicing them and the DM company will not speak to me as the DMP isnt in my name! I've resigned myself to this as I chased my tail for 6 months trying to get it sorted and failed.
My question is how long after settling all my debt (including the joint account) will it take for my file to repair itself to the extent I will be able to get a much lower APR (or even 0%) card? I was thinking 6 months? But reading on here it could take as much as 3 years? I just want to prepare myself for the future.

Thanks!

[Deleted User]

There's no single answer. 6 months may do it at the lower end of the market. If rejected, give it another 3 before applying again.

But it would be better to keep one of your cards and use it regularly to build a better credit history.

Brum

Would this also apply to an online shopping account? I do also owe about £800 to Very, but deliberately excluded this as I was going to carry on paying over the minimum payments on this to build my file.

[Deleted User]

Pay it off in full if you have the money. You don't need to pay interest to build a credit rating.

Use a card regularly and clear each month.

Brum

Great news, defaulted overdraft is all paid off. It's going to take a while to show on my credit report, but it means I'm now able to unlink myself financially from my ex-husband completely. I know this is going to stay on my file for 6 years, but all I can do is take it on the chin and build my rating back up. am taking zx81's advice and clearing the whole debt but keeping a small £500 limit on my lowest interest card and will use that to pay for fuel then clear at the end of the month by DD.

I do have a corporate Amex and had a corporate MasterCard in my last job, but I'm presuming they don't count towards my credit rating at all.. Is that right?

[Deleted User]

Brum wrote: »

I do have a corporate Amex and had a corporate MasterCard in my last job, but I'm presuming they don't count towards my credit rating at all.. Is that right?

It almost certainly doesn't. You should just be an additional cardholder, but it depends exactly how it was set up.

Do you the agreement/paperwork that you could check?

Brum

Deleted_User wrote: »

It almost certainly doesn't. You should just be an additional cardholder, but it depends exactly how it was set up.

Do you the agreement/paperwork that you could check?

I've just checked and I'm just an additional cardholder. Was worth a try

Thrugelmir

Having cleared the debt. Now is the time to learn without the crutch of a credit card or overdraft. Pay in cash. Learn to save.

DCFC79

Deleted_User wrote: »

Pay it off in full if you have the money. You don't need to pay interest to build a credit rating.

Use a card regularly and clear each month.

And to build a credit rating only 1 person is not worth it imo.

Brum

Thrugelmir wrote: »

Having cleared the debt. Now is the time to learn without the crutch of a credit card or overdraft. Pay in cash. Learn to save.

https://forums.moneysavingexpert.com/discussion/5438102

Already on it. I've not used a card for years.

Edit: Also, bit judgmental? I've got my debt down from 10k to 5.5 in 5 years and am now in the position to pay them off.

Ben8282

My advice is not to close any of the credit card accounts or to reduce any credit limits.
It is very easy to close accounts, reduce credit limits etc. It is not always quite as easy to get what you have closed back again. My general advice is not to close what you can't be sure of getting back. Remember that the defaults will remain on your credit files for 6 years so new applications will be a problem for some time. So rather than trying to improve your credit rating for the purpose of new applications, you need to think about how to make the best of what you already have.
After you have repaid all of the cards in full, continue to use them all. Set up a full balance direct debit on all of them and spend a bit on each card each month. Assuming that your credit cards accounts have always been conducted correctly and continue to be conducted correctly, you may find that once the existing balances have been repaid (depending on the credit card provider) various existing customer offers may start to become available to you.
With regard to the Very account, is the interest rate lower than the credit cards? If not, perhaps it would be better to pay that off in full rather than all the credit cards. Then pay off at least one credit card to use as above, continuing to reduce the others as best you can. Always pay more than the minimum, even if just £1. It avoids the minimum payment marker. There are different opinions as to the benefits of this, but it can't do any harm so why not do it anyway.
The advice not to use credit cards and instead pay cash is good advice for not getting into debt but not always practical in the modern world.