At the end of my DMP... now what ?

ChampagneSupernova36

Good evening, all, I hope everyone is safe and well. 

As the title suggests, I have been in a debt management plan since the beginning of 2017. I was determined to clear these bills and I stripped back all my spending in January and now I only have one payment left (have been furloughed at work thankfully). To be honest, I’ve been chipping away at the amount for so long I never really thought about what is going to happen once it has all been paid for...
I know being on the DMP and the previous missed repayments etc would have definitely not done wonders for my credit rating, but I really want to get on the property ladder in the next one to three years but I know I need to improve my score to even stand a chance at this. 

So, where do I begin ? I want to save as much as possible and want to avoid getting any credit because it has taken me so long to pay it all off... (I will NEVER get myself into that situation ever again). Wise ones, has anyone got experience of finally clearing debts and starting again? What will happen to my rating after clearing all debts and closing accounts? Saving tips also welcome, I have a good salary but I am inpatient and putting away a bit a month feels like a slog   I know that sounds silly and probably makes little sense but I wonder is anyone can relate?

Thanks for reading, stay safe x

PaulW922

Every lender assesses your creditworthiness (rating) differently depending on their own criteria so it really depends on who you apply to and what product you apply for. This obviously matters not just for credit cards and loans but for things like utility bills, mobile phones, insurance policies etc. The scores provided by Experian, Equifax, Clearscore etc whilst not worthless (despite what others say) are only a guide for you (and a very broad brush one at that) and not seen by anyone else.

So turning to your profile .... what probably matters  more than anything else when trying to rebuild your credit life is whether or not accounts were formally defaulted. If they were - and that is highly likely on a DMP - then six years after default they will drop off your file regardless. Until then, whilst they will appear as 'settled' or 'partially settled' they will still be there and not helping your profile. As they get older they matter less but given you have been on a DMP I would think you have a few? 

So I would first of all check on these things; default dates, debts not technically defaulted, duplicate entries caused by debt management companies, inaccurate balance information. Then, once you have addressed any issues you can consider whether or not you want any credit products to show that you are now sufficiently trustworthy to manage them. Maybe a full current account and a credit card with a small limit (even a credit builder card will do) which you use and pay each month will help to rebuild your credit reputation. A SIM only mobile contract might be get-able too and all these things will look good if managed properly. I know you say that you want no more credit, but do remember that many things these days count as credit products and you will benefit from having some positive history.

By the way - Ive been there too and I now have a squeaky clean credit file. It took years and I agree that you need to really have experienced these things to truly understand what it is like. 

ChampagneSupernova36

PaulW922 said:

Every lender assesses your creditworthiness (rating) differently depending on their own criteria so it really depends on who you apply to and what product you apply for. This obviously matters not just for credit cards and loans but for things like utility bills, mobile phones, insurance policies etc. The scores provided by Experian, Equifax, Clearscore etc whilst not worthless (despite what others say) are only a guide for you (and a very broad brush one at that) and not seen by anyone else.

So turning to your profile .... what probably matters  more than anything else when trying to rebuild your credit life is whether or not accounts were formally defaulted. If they were - and that is highly likely on a DMP - then six years after default they will drop off your file regardless. Until then, whilst they will appear as 'settled' or 'partially settled' they will still be there and not helping your profile. As they get older they matter less but given you have been on a DMP I would think you have a few? 

So I would first of all check on these things; default dates, debts not technically defaulted, duplicate entries caused by debt management companies, inaccurate balance information. Then, once you have addressed any issues you can consider whether or not you want any credit products to show that you are now sufficiently trustworthy to manage them. Maybe a full current account and a credit card with a small limit (even a credit builder card will do) which you use and pay each month will help to rebuild your credit reputation. A SIM only mobile contract might be get-able too and all these things will look good if managed properly. I know you say that you want no more credit, but do remember that many things these days count as credit products and you will benefit from having some positive history.

By the way - Ive been there too and I now have a squeaky clean credit file. It took years and I agree that you need to really have experienced these things to truly understand what it is like. 

Morning, thank you for your detailed reply and thanks for understanding.
I’m relieved to be finally out of debt. I have been offered a credit builder cards that I haven’t finalised because of my DMP and also I’m not sure if it’s wise. However, hearing your feedback, I think it may be good to rebuild credit. 

I have a few, small, direct debit outgoings (Netflix, now tv, phone insurance, union fees) perhaps setting up a direct debit from a new credit card and paying them off immediately OR using it to pay my phone bill and them paying it off immediately. I have also opened an account with loqbox that builds by credit history by saving a little each month (step change recommended these). 

Again, thank you for your reply, I was concerned about getting any more credit but if I am wise with it, it could work in my favour !

Kind regards 

Willing2Learn

ChampagneSupernova36 said:

Good evening, all, I hope everyone is safe and well. 

... I want to save as much as possible and want to avoid getting any credit because it has taken me so long to pay it all off... (I will NEVER get myself into that situation ever again). Wise ones, has anyone got experience of finally clearing debts and starting again? What will happen to my rating after clearing all debts and closing accounts? Saving tips also welcome, I have a good salary but I am inpatient and putting away a bit a month feels like a slog   I know that sounds silly and probably makes little sense but I wonder is anyone can relate?

Well done on being so close to completing your debt-busting journey.

When I got to the end of my DMP, I started  a savings snowball.  Similar to a debt snowball, but using all your short-term to medium-term savings goals instead.  It helped to keep me on the right path.

sourcrates

After finally clearing all my debt, i decided not to play the credit game any longer, i have no need of mortgages or loans, credit or store cards, i earn my monthly salary, and its all mine to spend, or not, living within your means seems to be an outdated concept these days, but i like it.

Almost everyone has some form of credit to service, people saying you must have this card, or you must have that card, you really don`t need any card, especially as credit cards are the most addictive things next to cigarettes, if you can trust yourself with one, and use it correctly, then so be it, however if you never have a debt balance, then you never earn that company any money in interest, and its likely they will close the account before too long.

There are lots of ways to build credit history, without actually having to use credit, do some research on the subject, just don`t get into debt again, for the sake of how it looks on your credit file.

ChampagneSupernova36

sourcrates said:

After finally clearing all my debt, i decided not to play the credit game any longer, i have no need of mortgages or loans, credit or store cards, i earn my monthly salary, and its all mine to spend, or not, living within your means seems to be an outdated concept these days, but i like it.

Almost everyone has some form of credit to service, people saying you must have this card, or you must have that card, you really don`t need any card, especially as credit cards are the most addictive things next to cigarettes, if you can trust yourself with one, and use it correctly, then so be it, however if you never have a debt balance, then you never earn that company any money in interest, and its likely they will close the account before too long.

There are lots of ways to build credit history, without actually having to use credit, do some research on the subject, just don`t get into debt again, for the sake of how it looks on your credit file.

Willing2Learn said:

ChampagneSupernova36 said:

Good evening, all, I hope everyone is safe and well. 

... I want to save as much as possible and want to avoid getting any credit because it has taken me so long to pay it all off... (I will NEVER get myself into that situation ever again). Wise ones, has anyone got experience of finally clearing debts and starting again? What will happen to my rating after clearing all debts and closing accounts? Saving tips also welcome, I have a good salary but I am inpatient and putting away a bit a month feels like a slog   I know that sounds silly and probably makes little sense but I wonder is anyone can relate?

Well done on being so close to completing your debt-busting journey.

When I got to the end of my DMP, I started  a savings snowball.  Similar to a debt snowball, but using all your short-term to medium-term savings goals instead.  It helped to keep me on the right path.

Thank you both for the insight. Yes, my main goal is to build my score and save save save and keep in the black. I haven’t had a credit card/overdraft/loan of any kind for 3 years + and if there are ways to build my score without any credit that is a bonus. I have loqbox as aforementioned and also my phone bill that I had had for 4 or so years and haven’t missed a payment.  This forum is all part of my credit building research and exploring options and tips for saving, I have so much left over after I have paid my outgoings since the DMP is over that I’m going to chuck into my locked savings put and want to (first of all) build an emergency fund.
Thanks again for your responses x

DebtHurricane

One thing I have found helpful is having an emergency fund pot which I don’t touch (slowly adding to it each month). That is there for general emergencies such as job loss / massive car repair ect. 

But then I have lots of small pots. For example- car tyres. It helps me to know exactly what I’m saving for. Once I reach the goal, I will make the smaller pots into a bigger pot. So car tyres, and MOT costs will be rolled into one car maintenance pot. 

Otherwise the goal is too high and far away for me to stick at saving without dipping into it. 

ChampagneSupernova36

DebtHurricane said:

One thing I have found helpful is having an emergency fund pot which I don’t touch (slowly adding to it each month). That is there for general emergencies such as job loss / massive car repair ect. 

But then I have lots of small pots. For example- car tyres. It helps me to know exactly what I’m saving for. Once I reach the goal, I will make the smaller pots into a bigger pot. So car tyres, and MOT costs will be rolled into one car maintenance pot. 

Otherwise the goal is too high and far away for me to stick at saving without dipping into it. 

ThankYou, this is a really useful tip! The end goal seems so so far away (although so did my DMP and that’s over now!). I want to get my own home, but also build my emergency fund so making little emergency funds would be helpful.

best wish’s x