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

[Creditrating]

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 ???

With an IVA will they still take dla into account as income though ? I felt that it shouldn’t be counted towards income

In the meantime, go to MoneySavingExpert and fill in the budget planner of income/outgoings and debts then post on the Debt-free Wannabe boards.

Thanks I’ll have a look on there

If this is all you can afford, why have you taken another credit card out to build your credit and spent more on it than you can afford to pay off each month?

Have a read here too

Don't fret, what's been and gone is now yesterday's problem. You weren't to know. Let it be.

What you need to do now is look forward, with official and good debt advice on how to solve this.

Get back in touch with Setpchange or turn to CAB. You can do this, yes it may take drastic action and I think you are at a point that your credit rating is about to dive, but it's numbers on a screen.

Right now being on the right path to financial recovery and peace of mind is better.

You can do this.

Are you planning to borrow more money OP? Is that why you want to improve your credit score?

No one will lend you any more money for a very long time. Not only would it be incredibly risky for the lender (you've shown that you borrow money and don't pay it back) but it wouldn't be responsible of them to lend to you.

You need to focus on how to deal with your current debt situation.

no not planning to I just thought it would be good to try and improve my score

This might be useful reading

debtcamel.co.uk/disability-benefits-and-debts/

I’ll try and speak to CAB as I really wasn’t happy with stepchange

Oh weird - MN don’t like the link to the Stepchange page on ‘IVA or Bankruptcy’ - you can Google it.

I think DLA will be included in both if it is a significant part of your income per month. They treat ALL income the same.

Of course DLA is income. As well as covering the extra costs of disability, it is intended to replace earned income if you cannot work yourself or need to care for a disabled child.

As others have said, you are putting the cart waaayyyy before the horse with trying to rebuild your credit rating. You need to deal with the £60k of debt then rebuild your credit rating.

With £60k in debt and no assets except a car, your course of action would almost certainly be bankruptcy. If they take the car off you, could you use the DLA to pay for a mobilty car? If you don't qualify for that due to bankruptcy and need the car due to disability, can you ask to keep it? Otherwise, you'll have to make do without a car (taxis, public transport etc) until you qualify for a motobility car. Carrying on as you are is likely to mean that you'll be in debt forever, or at least until your circumstances change significantly.

But the dla is already earmarked for therapies etc so I’m not going to be able to allow them to consider it as income when it is all used for my child ? Anything else yes that’s fine if it is actually income but not dla I don’t think it should be counted

I would try stepchange again, they should take into account necessary spending so that your repayment plan is sustainable

DLA counts as income I'm afraid.

As PP said, it may be best to look at declaring bankruptcy as there is no way you'll ever clear 60k of debt this way.

OP having had a DMP in the past, no thankfully paid off, do re contact StepChange or PayPlan again. You need to be brutally honest with them about your monthly expenditure. Make it realistic and manageable. I suspect you may not have stuck to your budget every month hence why you found it difficult to manage. Your £60k isn't going to go away by only paying a token payment to each creditor every month, you need to take some drastic but sensible decisions to pay it off. Have a look at the DebtFreeWannabe boars on MoneySavingExpert

It doesn’t matter if you think it shouldn’t be counted - it only matters what the terms of the creditors say (IVA or DMP) or what the Official Receiver says (bankruptcy).

I think bankruptcy is probably the only solution where you’ll be more likely to keep DLA separate.

Is your income going to recover in the short-medium term (within 2-3 years)?

I’m horrified that another credit card company allowed you to take out another card. Didn’t they do a credit check? Or can you get credit building cards with poor credit ratings?

Why is it that you feel DLA shouldn’t count as income?

When they're looking at income, expenses are also taken into consideration while financial planning/budgeting. So DLA being considered income doesn't mean they'd disregard that you use it for therapies etc as necessary expenses.

Hi!

I was in a very similar situation. £20,000 of debt and I get DLA.

I went to stepchange and got a DMP.

You set your own budget! So I wanted to pay £100 a month to stepchange to pay off my debt, so I set my budget saying I was spending everything but £100. It doesn't matter they are taking in my DLA as I had my sons expenses put on there, including ones upcoming or whatever just to cover all costs apart from what you want / can repay. Obviously repay as much as you can or it won't get paid off.

I'm now debt free!!!!!!! All repaid via DMP.

I now have a credit rebuilding credit card, and repay in full every month, but no point doing that until you've paid off.

Hope that helps! Get back onto stepchange, CAP or citizens advice

Paying £100 a month would take OP 50 years to pay off £60k.

It's not a light step but in your shoes I'd declare bankruptcy.

Or can you get credit building cards with poor credit ratings?

Of course you can. They wouldn’t exist otherwise, would they?

Because it’s for my child’s disability and we use it all for therapy that we can’t get on the nhs

I had to send bank statements after applying and they said yes to the card

Yes I might try that so I can basically say the dla is already accounted for and then they can’t use it as income ? So eg I get £240 a month dla but show the invoices for therapy for that amount and then they can’t count it ?