Should I take the hit?

braken2000

Hi everyone

Bit of a weird one here. I am currently in the process of setting up a DMP as hit a point as a mature student being unable to pay all my debt. Made peace with this and fully planned the next 6 years considering there would be defaults etc placed on my credit file.

I have however just been given an inheritance which covers my debt and leaves me with enough for a deposit on a house (what the inheritance has been given for).

I would not be looking to move for at least 18 months as want to qualify and earn first before trying any kind of house purchase.

My question is this, is it worth me rushing (and I think I have days to stop the defaults, not weeks) and protect my credit file at all costs? I think I already know the answer, but assuming that my credit file should be protected at all costs if a potential mortgage is going to be involved?

I have a good idea of how to recoup the difference in the inheritance over the 18 months by using a Lifetime ISA and saving regularly. Just wanted people's opinions on what to do? I do not think anything has defaulted yet, but could in the next week, just hoping if I should act fast, I am not too late .

System

If you go on a DMP it doesn't stop creditors sticking negatives on your credit file so you could find negatives being placed on there every month you remain in the DMP. Any negatives are going to affect your ability to get a mortgage 3/4/5 years from the date of the last one.

A DMP doesn't stop you getting CCJs when you have a wad of cash sat in the bank.

braken2000

The DMP has not quite started yet. I am assuming that a missed payment, which is what I have at the moment is not going to be as bad as a default for example?

System

A missed payment is better than a default but a missed payment may still have an impact on your ability to get a mortgage. One on its own in isolation won't be an issue but when you've several, even if its one to each creditor, may cause issues.

If you're planning on going for a mortgage you need squeaky clean.

Lioness_Twinkletoes

Considering a default will remain on your file for 6 years, I think paying your debt and protecting your credit record is a no brainer if you want a mortgage.

braken2000

Thanks for the responses

I have gone with paying it all off, then using what we would have paid on it to save. At least no more high APR . The rest has gone into a LISA and a Bond .