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 ???

I think that I mistakenly thought that I was paying small amounts and that’s why I was then successful getting the credit card as previously I couldn’t get one at all so I thought it had helped my score but I was obviously wrong I get so confused about it all

Did you make it clear it was your child's dla and not your own? I don't see how a child's income can be included, its not like the debt is in thier name. Surley only your income counts as its your debt

Sorry for typos!

if the debt was to pay for expenses for your child won’t your husband pay towards them?

Yes I did query it but they said it had to be counted. We paid a few months but I stopped as it was just crippling us and wasn’t fair to have the dla effectively taken

It was only a small amount overall the vast majority of the money was spent on me

As the child is under 18 it will count as household income.

DLA is taken into account as it is household income. But the child’s therapy expenses are also taken into account as outgoings so it balances out. For example (simplistically of course) if DLA is £300 then you have £300 income but if the therapy is £300 then you have £300 outgoings so the surplus money is 0.

Op, did the creditors accept the £1 token payments and the £5 ones?

Did they accept to stop interest charges and fees?

If so stick with that.

That means you have already defaulted on the debts. What paperwork have you recieved.

If so, you can carry on paying the agreed amount and the token payments. Every 6 months the creditors will contact you to see if your situation has changed and to see if you can offer more. You do not have to agree to increase payments but they will always suggest. You may have to fill in income and expenditure forms.

This can go on for years/decades. The debt may be repackaged and change hands and you can make settlement offers and they may also offer settlement offers.

But first check if it has been defaulted on and that all interest and fees have stop being added.

Lots of info online and on money saving expert.

With regard to the new credit card, pay it off ASAP. You cannot build your credit rating right now and there is no point to doing so.

Iva and dmp can be expensive, often defaulting and discussing with creditors is the best way. It sounds like you have already defaulted, so please check out your current situation properly. You need to know what exactly is going on with each and every debt.

I think previous posters may be right that bankruptcy is your only option.

However, you also need to look at your income and outgoings. If you have a credit builder card that you aren’t paying off in full each month, that is usually eye-wateringly high interest and in any event, the amount you are not paying off each month means your debts are continuing to climb.

Also, did you tell the credit card company about your existing debt? I’m astounded they gave you the card in the first place. If it was just based on the bank statements with artificially low repayments on your other debts, you need to check there wasn’t any requirement to tell them about your other debts.

I am in Scotland. I had an appointment with a Citizens Advice Money Adviser. Once you give them your information, they will advise on best way forward. You cannot sensibly expect to continue to make token payments, you have to address this. I am on PIP but this was disregarded for the calculation.

How much doing you now owe on the credit building credit card if you only paying just over the minimum payment?

is the £1 payment for existing debt legally binding or just something you are doing?

as you say, please get further advice tomorrow

I was in a similar position OP. Had £70k debt, was in council housing, sole income was benefits including DLA for my DS. I was paying £1 a month to creditors which kept them at bay, although it was a hassle having to redo a financial statement every now and then. Eventually I went bankrupt. That was the only realistic option for me, and it had very few repercussions since I had no assets (I don't drive so had no car) and I didn't need to make any further repayments since my income was solely benefits. I could keep my bank account and debit card as I switched to a basic account (it doesn't allow you to have an overdraft). I believe you may be able to keep your car as it's not expensive and you need it for your disabled child - but get further advice about that.

Definitely seek advice from CAB or similar. An IVA doesn't seem like a good plan as you'd need to make repayments and as you say, they'd consider the DLA as income, whereas it's likely you wouldn't have to make any repayments with bankruptcy. Both options will damage your credit records but it's for a fixed period and then wiped clean. The six years will start once you've done the bankruptcy, whereas an IVA stays on your record while you're paying it plus six years afterwards, so overall it's a longer period.

The bankruptcy was back in 2014 and it's completely wiped off my credit records now. I was able to get a credit rebuilder card within two years of bankruptcy (you don't have to wait six years0 which I paid off in full every month, and I kept my phone contract, so my credit record looks OK now - not great, but above average for my area. It doesn't matter anyway as I don't need any credit.

www.stepchange.org/how-we-help/debt-relief-order.aspx?gclid=CjwKCAiA-8SdBhBGEiwAWdgtcFdA4k3yNnsGBz67fBmg84Ari6vn-F8GXjx-811Ty1oiPzT61CMsixoC3C4QAvD_BwE&gclsrc=aw.ds
Have a read of this

Strange, the Stepchange link I just posted immediately hidden.

Try this one www.citizensadvice.org.uk/debt-and-money/debt-solutions/debt-relief-orders/

Make an appointment with CAB.. They are so helpful
I was in a similar situation but much less debt
The majority of my income is PIP and although it was counted as incomings I balanced it in my outgoings so it was all accounted for
They liaise with creditors on your behalf and agree repayment plans

What’s the interest rate on the credit card?

I would recommend speaking with the CAB as soon as possible about bankruptcy. They will help with the application form too. To declare bankruptcy isn't free, it cost me £300. This was over 10 years ago though.

The whole process was done sensitively and supportively. However, they did take my car. It wasn't an expensive one either and only worth a few grand.

I had to pay a huge amount back monthly towards my accrued debts, for 3 years. It's not as simple as the debts simply being written off.

If you are unemployed or on a low income the repayments are significantly lower I imagine.

The relief I felt after declaring bankruptcy was unimaginable. Yes, it was tough for a few years but the debts gone and my credit rating is back to good.

OP - you say you have taken out another credit card - are you still living beyond your means?

As all pps have said, you need to slash your outgoings. Not take out further credit. Not keep spending.

You have a VERY long way to go.

Just a thought though - you say much of the £60k was due to private health costs - were you involved in some sort of accident that you could claim this back for?

Why do you want to improve your score?! Nothing will improve it until you pay back all the money you owe. Why are you talking about being fair? It's about what is manageable for you. If you need £1000 for basic necessities and you earn £1300 then the £300 should be used to pay off debt. Every month you pay as much as you can that you don't need to pay absolute necessities. You do that for years until it's paid off. And then you think about building a credit score. Thinking about building one whilst you owe £60k makes no sense at all! You pay off your debt first with as much money as you can spare.

Some important points that I think have been overlooked;

• all the debts are in your name
• your income is unlikely to improve in the next 3-5 years
• you’ve got a secure council tenancy
• you’ve got a husband (who you’re 100% sure isn’t financially abusive) and whom should immediately become the owner of your car

Obviously you must discuss this and bankruptcy with him, but he doesn’t need to go bankrupt, only you. Any assets in his name (such as a car) cannot be touched by the official receiver.

Please have a look on the moneysavingexpert boards, as they really know their stuff, but from what you’ve said so far, I honestly think it’s the only realistic option for you, and allows you to have a completely clean slate before your youngest leaves junior school!

Holy Moly you're in a whole heap of s##t.! You need to speak to a specialist debt advisor ASAP

OP what's your monthly household income?

Sorry but I do not understand how you have that much debt but paying off so little each month

I had around £20k of credit card debt a few years ago - it was literally eating me alive. My payments across all cards came to around £500 a month at least and the interest was utterly mind boggling

As it is I’ve actually made huge changes and paid it all off by overpaying payments massively but you will literally never be debt clear or have any credit rating paying off £5 a month or token £1 payments. You would at this stage be better taking bankruptcy and living with the repercussions of it and rebuild from there

Because she has no money. How hard it that for you to understand?