I will be debt free by March but....

soon2b_debt3 · 16 January 2020 at 4:18PM

Hi everyone,

I will finally be debt free by March this year after having a DMP through Stepchange. However I'm not sure what I actually do after the debt is gone in regards to building my credit rating?

I've read about credit building cards but I'm very wary of these as I don't want to get myself in the same situation as before.

This the first time I will be debt free since I was 21, I'm now 34 so I'm completely clueless about how to improve it.

All my credit card accounts are closed and the only bills in my name are for the internet and my mobile phone.

Karonher · 16 January 2020 at 9:16PM

My only suggestion about a credit card would be to use it for just one thing - petrol if you drive, some food shopping if you don't - and arrange to pay the full amount off each month. Set it up with the bank so that the full amount comes out.

fatbelly · 16 January 2020 at 9:32PM

Where do you do most of your shopping? If Tesco, a Tesco clubcard credit card would make sense, if Sainsbury's, a Sainsbury's nectar credit card, if Asda an Asda credit card.

Obviously pay them off in full each month and the full amount direct debit is a good idea

middleclassbutpoor · 16 January 2020 at 10:21PM

My suggestion is not to think about your credit score - have you got a reason for needing a good credit score?

soon2b_debt3 · 17 January 2020 at 12:40PM

Hi everyone,

Thank you for the advice given. I shop at Aldi to try and keep my monthly outgoings low, however I do drive. I never thought about using a card just for petrol in all honesty!

I'm intending to move in to a rented property by the end of year so I'm eager to improve my score as I have 2 defaults on my report from 2016.

fatbelly · 17 January 2020 at 1:57PM

soon2b_debt3 wrote: »

Hi everyone,

Thank you for the advice given. I shop at Aldi to try and keep my monthly outgoings low, however I do drive. I never thought about using a card just for petrol in all honesty!

I'm intending to move in to a rented property by the end of year so I'm eager to improve my score as I have 2 defaults on my report from 2016.

In March they should show as settled defaults, which is something.

As for the credit cards, have a play with the eligibility checker on this site. It's a soft search so causes no harm

middleclassbutpoor · 17 January 2020 at 8:17PM

I would get plenty of cash in the bank and forget credit cards. You have just about to get out of debt.

Save 6 months expenses for your emergency fund.

Make sure you are saving plenty for your retirement

Save for a deposit on a house or repay your mortgage..

soon2b_debt3 · 21 January 2020 at 12:06PM

Morning Everyone,

Once I've paid my debt off I'll be putting away around £450 a month in savings, this is to put towards moving out and my emergency fund. I have a feeling I will be asked to put forward a lot of rent in advance so most of the £450 will go towards the moving out fund.

I'm savings towards moving in to a rented property. I have no interest in getting a mortgage and I'm currently living in a recently deceased family members home until my family sell it.

fatbelly · 21 January 2020 at 8:26PM

soon2b_debt3 wrote: »

I'm savings towards moving in to a rented property. I have no interest in getting a mortgage and I'm currently living in a recently deceased family members home until my family sell it.

If you get your rented property through an agent you will probably be subject to a credit search so it's still worth building your credit rating

You could have a think about owning your own property. £450 a month would service a 80k mortgage, possibly more.

Moneyminded · 21 January 2020 at 9:30PM

I would recommend that you access your credit reports via all 3 credit reference agencies, check that all the information is correct and up to date. If you aren't on the electoral register do so now as this has an impact. Try not to make any applications for credit for 6 months before you plan to move and make sure you keep up your payments on the internet and phone bills.

Good luck

EssexHebridean · 22 January 2020 at 1:11PM

If you genuinely don't trust yourself to have a credit card at the moment then I'd say you need to listen to that gut instinct for the time being. It took me YEARS from being clear of card debt to trust that I'd not get into hassle with cards again - although once I did feel ready I ensured that i set up as suggested above as "paid off in full" each month and now it simply wouldn't occur to me to do anything else.

If you haven't already seen it then the guide on the main MSE site is well worth a read.

I will be debt free by March but....

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