Advice needed to repair credit file

[Deleted User]

Hi,

I'm just looking for some advice on how best to repair credit report quickly. 

I have two accounts in default and they both have a payment plan in place. I have the opportunity to consolidate these debts with a personal loan. 

Would this be worth doing? Would it look better on my credit file to pay these off with a personal loan? Currently I am not incurring any interest or charges on those accounts, and the personal loan would be 19% interest so would cost me more. I can afford the loan repayments. 

Thank you

Grumpelstiltskin

Honestly it isn't the best idea to replace a debt with 0% interest for one with 19% interest.

A better idea would be to pay as much as you can whist it is interest free.

What do you think you can achieve?

fatbelly

Not really. The defaults stay on file for 6 years, regardless of what you do. I guess a settled default might look a little better but you are adding a further unsecured (high interest) loan, which works against you.

As you will be adding interest whereas at present there is none, I can't see any advantage to your plan

When it comes to your credit history, the underlying principle is that it must be accurate. If you can avoid defaults, keep a stable address, stay on the electoral roll and handle a credit card that you pay off in full each month, that will make you look like a better prospect to lenders.

EssexHebridean

So having got into debt by borrowing, you now want to borrow again? Add to that - you are in a position where currently paying off these debts is in hand, and there is no interest being added - yet you want to change that to a new heap of debt, on which you pay a horrific 19% interest?! 

Consolidating can work on occasion - that should be acknowledged. Take the example of someone who is on a DMP which was rushed into, they are being hit with interest each month, and they have already put in several years of legwork learning how the process works, getting their budget super-tight, they have their emergency fund saved and only touch it for genuine emergencies because everything else is budgeted. They discover they are eligible for a 0% money transfer card for a period of time that would allow them to pay off those debts. They take the offer - and immediately close any other credit card accounts they have open to avoid the temptation of using credit again, and budget to clear the remaining debt ahead of the 0% period ending.  Does any of that - and better still all of it - mirror the position you see yourself in though - I’d say very far from it. 

You’re in an incredibly good position, and you have NOTHING a to gain by taking additional debt at this point. Put in the work, clear what you owe, and learn from the process. The very fact that you are considering the scenario I have set out in my paragraph 1 above tells us that you aren’t quite fully there yet with that learning. 

A quick fix can be tempting, but going through the process will put you in a better position to live the rest of your life with a far better understanding of how to stay out of debt. In this instance, it will also cost you far, far less. 

Further question - is this the same debt you arrived here with in 2015? Or is your position now the result of subsequent consolidation? 

RAS

Taking out the loan would be silly.

Your current defaults fall off your credit record after 6 years and you are paying no interest. You might even get a reduced full and final offer sometime.

Nothing you do now with respect to those debts can affect that credit record.

Transfer that debt to a loan, and you've credit another bad, more recent, record on your credit history. Get into a bit of a mess and you've got a late payment marker or two. No, you don't ever intend to do that, but you didn't intend it last time either.

Take out the loan and you will extend the period when your credit record is damaged.

sourcrates

[Deleted User] said:

Hi,

I'm just looking for some advice on how best to repair credit report quickly. 

I have two accounts in default and they both have a payment plan in place. I have the opportunity to consolidate these debts with a personal loan. 

Would this be worth doing? Would it look better on my credit file to pay these off with a personal loan? Currently I am not incurring any interest or charges on those accounts, and the personal loan would be 19% interest so would cost me more. I can afford the loan repayments. 

Thank you

Why the urgency here?

"I'm just looking for some advice on how best to repair credit report quickly". 

Only time can do what you are asking, why are you so concerned about how your credit file looks?

Your file will improve over time, anything else is just going to cost you more money for zero gain.

Rob5342

I agree with what everyone else has said, be patient and just keep paying. If your income drops for any reason then you can pay a reduced amount. If you get a lump sum for any reason then you could make a reduced offer to clear the debt. If either of things happened with a new loan you could end up with a new default in the first scenario, and have to pay the full outstanding amount in the second.

sparks_2023

My outlook is that with at least 2 accounts registering a default this month, I've accepted that I am personna non grata for any credit for the next 6 years.

So be it. No bad thing really. It'll break my "debt addiction".

There are usually different ways of looking at things, and a step back on to the "blacklist" could totally reshape a person's relationship with credit.

cymruchris

Credit history can't be repaired quickly. Once something has been factually recorded (i.e. the defaults), whether they are settled or not won't have a major impact, as the major impact is that they got there in the first place. As time passes, (years) they become less significant as long as you maintain your present day history in a positive way. After 6 years they drop off. Nothing will make them 'disappear'. As others have said, I wouldn't be taking out a loan at 19 percent APR to 'repay' the defaulted accounts. With your current payment plan - do you have an idea of when the default will be settled at current level of payment? (Or are you paying a token amount of £1 a month or something similar?)