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Original poster

Have I been managing my credit card wrong ? Trying to improve credit rating

150 replies

Creditrating · 01/01/2023 17:57

I have a rubbish credit rating and about 60k of debt

recently got a credit building card and used it but each month I don’t pay the minimum (which is usually 10-13 pounds) I will pay £40 or £50 instead.
just read somewhere that actually you should use it and pay off in full each month and that’s what increases your credit rating so have I now made mine worse ???

OP posts:
Fuuuuuckit · 01/01/2023 17:59

If you don't pay it off in full you are continuing to accrue debt therefore your credit will be worse, yes.

What are you doing to reduce your actual debt op? £60k is an eye-watering amount of debt if its unsecured with no plan to pay it off.

Original poster
Creditrating · 01/01/2023 18:01

Fuuuuuckit · 01/01/2023 17:59

If you don't pay it off in full you are continuing to accrue debt therefore your credit will be worse, yes.

What are you doing to reduce your actual debt op? £60k is an eye-watering amount of debt if its unsecured with no plan to pay it off.

I make a £1 token payment per month on each of the debts

OP posts:
Original poster
Creditrating · 01/01/2023 18:02

If I start paying off in full from now though will that help? I though by paying way above the minimum payment that would help I didn’t realise it had to be paid off in full I just thought more than the minimum was the right thing

OP posts:

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NoSquirrels · 01/01/2023 18:03

Yes, the idea with a credit-building card is you buy a small amount with it each month that you can afford (e.g. pay for your groceries on it) and then pay it off IN FULL every month.

As a PP says, what help are you getting to manage your debts? Because if you’ve hit £60K debt that is an actual emergency and you won’t improve your credit rating until it’s paid off (unless you are a very high earner, which I assume you’re not).

wherearebeefandonioncrisps · 01/01/2023 18:03

Your credit rating will not improve if you carry on like this.
That's an enormous debt.
Suggest some debt support from a reputable organisation.

BuddhaAtSea · 01/01/2023 18:03

You have £60,000 on credit cards, is that correct?
Credit card interests are eye watering, in the region of 30%.
I would call them and try and negotiate a payment plan.
If they are on a 0% interest for however many months, yes, you can just pay a bit over the minimum, but when the term finishes, you have to pay in full or transfer to another 0% card.
HTH

ny20005 · 01/01/2023 18:03

Your credit rating is the least of your worries. Are you in a plan to pay off your debt ?

NoSquirrels · 01/01/2023 18:04

Creditrating · 01/01/2023 18:02

If I start paying off in full from now though will that help? I though by paying way above the minimum payment that would help I didn’t realise it had to be paid off in full I just thought more than the minimum was the right thing

Yes, you must pay off in full from now on.

Who is helping with a debt management plan? Stepchange?

WelshNerd · 01/01/2023 18:04

If you've defaulted on your debts and making token payments, you won't be able to improve your credit rating until the defaults are satisfied and/or removed from you credit file. Potentially this could take 6years or more.

Original poster
Creditrating · 01/01/2023 18:04

BuddhaAtSea · 01/01/2023 18:03

You have £60,000 on credit cards, is that correct?
Credit card interests are eye watering, in the region of 30%.
I would call them and try and negotiate a payment plan.
If they are on a 0% interest for however many months, yes, you can just pay a bit over the minimum, but when the term finishes, you have to pay in full or transfer to another 0% card.
HTH

No the £60000 is other debts as well, a personal loan, some credit cards and a few other things

OP posts:
Idontgiveagriffindamn · 01/01/2023 18:05

A credit building credit card even paid off in full every month will have no impact on your credit rating whilst you’re not tackling your £60k debt. Unless you’re on a debt management plan with £1 per debt paid off a month agreed then your credit rating will be getting worse

RJnomore1 · 01/01/2023 18:05

Yes you’ve made it worse. You’ve a huge amount of unserviced debt and you’ve now added to the amount. The advice would be to use the credit building card after other debt is cleared and for something you would buy anyway say petrol then pay in full each month.

You need specialist debt advice op not asking on here. That’s beyond most peoples debt levels. Do you know what spending patterns got you here and have you addressed that do it isn’t getting still worse?

Original poster
Creditrating · 01/01/2023 18:06

NoSquirrels · 01/01/2023 18:04

Yes, you must pay off in full from now on.

Who is helping with a debt management plan? Stepchange?

Show quote history

No - previously we were with stepchange but they wanted so much each month as they took dla into account as income and I didn’t think that was flat and it meant we were struggling on the DMP so I stopped it and contacted everyone myself. Set up a couple of plans for £5 a month and the rest are all £1 token payments

OP posts:
Original poster
Creditrating · 01/01/2023 18:06

flat-fair

OP posts:
FeinCuroxiVooz · 01/01/2023 18:07

your credit rating will be getting worse if your debt is increasing every month rather than decreasing. yes you are doing it wrong.

go to citizens advice and get help to restructure your debt. if any of the £60k is at a high interest rate that needs to be rearranged at a lower rate. once all your debt is at a rate that is realistic, your repayments on each debt should at a minimum be the interest accrued each month plus a little bit more so that the total is going down, and the credit builder card should just be used for one manageable thing that you can pay off in full every month, e.g. your weekly supermarket shopping, and nothing else.

good luck!

Nw22 · 01/01/2023 18:08

How is paying £1 a month fair when you owe 60k

eurochick · 01/01/2023 18:08

You need a plan to clear the existing debt, not to be increasing it every month. Until you have cleared the debt I would suggest cutting up all your cards. 60k is a huge amount of debt. You can't keep increasing it.

Original poster
Creditrating · 01/01/2023 18:09

RJnomore1 · 01/01/2023 18:05

Yes you’ve made it worse. You’ve a huge amount of unserviced debt and you’ve now added to the amount. The advice would be to use the credit building card after other debt is cleared and for something you would buy anyway say petrol then pay in full each month.

You need specialist debt advice op not asking on here. That’s beyond most peoples debt levels. Do you know what spending patterns got you here and have you addressed that do it isn’t getting still worse?

It wasn’t really spending habits as such as had no debt before then had a massive issue over 2-3 years , got into huge debt. Issue resolved but obviously left with the debt which we would have managed to pay kore off but our financial situation took a huge turn for the worse, it’s not like it was years and years of overspending etc it was a sudden issue and short lived

OP posts:
Original poster
Creditrating · 01/01/2023 18:09

Nw22 · 01/01/2023 18:08

How is paying £1 a month fair when you owe 60k

Because that’s what i can afford now

OP posts:
CharityShopChic · 01/01/2023 18:10

Your credit rating is NEVER going to improve when you are sitting with £60k of unsecured debt, and paying £1 off the debt each month. Nobody is going to lend you any money, so "credit building" is absolutely pointless at this stage. A credit score is only relevant when you want to borrow more and as you will not be able to do that, what exactly are you trying to do?

Credit building is something you could start thinking about once you have addressed the serious debt and started paying it off in large chunks.

NoSquirrels · 01/01/2023 18:10

Have you considered bankruptcy? If you’re on a limited income with DLA in the mix you might actually not be well served by trying to manage that amount of debt.

You cannot improve your credit rating with anything like a credit builder card - or anything much at all, tbh - whilst those debts are not being paid.

lamaze1 · 01/01/2023 18:11

Do you have any assets (house)? If not maybe just apply to be made bankrupt and then start again. In the short term this isn't going to help your credit rating but tbh repaying £60k via token payments means you're unlikely to ever sterile your debts anyway. At least bankruptcy would draw a kind under your current debts. Obviously we don't know your full circumstances do you probably ought to seek advice even if it is just cab.

Original poster
Creditrating · 01/01/2023 18:11

FeinCuroxiVooz · 01/01/2023 18:07

your credit rating will be getting worse if your debt is increasing every month rather than decreasing. yes you are doing it wrong.

go to citizens advice and get help to restructure your debt. if any of the £60k is at a high interest rate that needs to be rearranged at a lower rate. once all your debt is at a rate that is realistic, your repayments on each debt should at a minimum be the interest accrued each month plus a little bit more so that the total is going down, and the credit builder card should just be used for one manageable thing that you can pay off in full every month, e.g. your weekly supermarket shopping, and nothing else.

good luck!

Thanks that makes sense . I had wrongly thought just paying more than the minimum was what i needed to do. At least I know now how to manage it I should have checked but I’d seen stuff saying how it’s better to always pay more than the minimum so assumed that was what I needed to do alongside making the token payments each month

OP posts:
Original poster
Creditrating · 01/01/2023 18:12

lamaze1 · 01/01/2023 18:11

Do you have any assets (house)? If not maybe just apply to be made bankrupt and then start again. In the short term this isn't going to help your credit rating but tbh repaying £60k via token payments means you're unlikely to ever sterile your debts anyway. At least bankruptcy would draw a kind under your current debts. Obviously we don't know your full circumstances do you probably ought to seek advice even if it is just cab.

But will they take our car if we are bankrupt ? That’s the only asset we have

OP posts:
NoSquirrels · 01/01/2023 18:12

Forget about your credit score - it is definitely fucked.

How will the debt be dealt with? If you have no realistic prospect of paying off £60,000, then you need to think about bankruptcy.