Awful Credit - how long to turn it around?

[Ontgedothe]

Has anyone had a really really awful credit history, like CCJs, numerous unpaid recent stuff (1-2 years old) pay day loans, overdrafts etc and then started to pay minimum amounts off each day. How long did it take to see an improvement in your score?

I’ve spent the last ten years struggling with my mental health (including impulse spending and poor money management) and burying my head in the sand, but I really need to start sorting it out. A DRO was mentioned but I can’t due this due to my car (salary sacrifice- and if I stop that i don’t have the fund to buy even a cheaper car and I need a car for work) thanks

I built up about £20k of debt upto 2012. I had no way to repay it due to redundancy and pregnancy so I went bankrupt. It was horrible, but the relief was great. No more worrying about making payments.
It did mean I could’ve qualify for any credit, including mobile phone contracts.
My bankruptcy was discharged in 2017. I got a credit card to build up my credit (very high interest one was the only one I could get and they regularly put up the interest, but that is another story).
My credit score is good now. I qualify for low interest loans and credit cards. I am very careful with my spending and ensuring that I pay everything back on time or in full. The bankruptcy has no impact on my life now and I’m glad I did it.
I don’t know what would happen if I wanted a mortgage.

*couldn’t not could’ve

A CCJ will drop off your credit file completely in 6 years. Similar for other missed payments etc. However after even a couple of years they have less impact on your profile.

Don't worry too much about your "score" although they can be good indicators that things are improving they aren't often seen or used by lenders who'll assess the profile rather than judge you on a number generated by a third party company.

I'd highly recommend speaking with the charity step change - www.stepchange.org for free helpful debt management advice. They're great and can go through all your options.

Good luck, it's never as bad as you think

CCJ - 6 years
Bankruptcy - 10 years

• a little extra to build up your credit rating again

Speak to step change or one of the other charities

CCJ will stay on your file 6 years after you have settled the debt.

www.moneysavingexpert.com/banking/budget-planning/

www.moneysavingexpert.com/budgeting-debt-help/

I recommend noddle.co.uk for weekly credit reports.
I’ve never had CCJ etc but did accrue huge debt of approx £30k due to the end of a financially abusive relationship.
I paid all the debt back over six years without IVAs etc, but did have debt collectors on the step. It was an awful time. Even after 6 years my credit was rock bottom. I had a marbles credit card and worked up from there. I was religious about paying off in full each month, but timing it right so credit score improved as it looked I was using credit.
I managed to stay in one place for over 3 years, having previously moved 15/16 times, and some years later got a mortgage (pre 2008 crash).
I was desperate at times and it felt like money and lack of it consumed my every thought.
But once I managed to turn the tide to have ‘just’ enough coming in than going out, my score did improve fairly quickly.
15 years after being £30k down and with no credit available and using a 17% rate card to buy food, I now have an excellent credit score, no debt other than a mortgage and an Amex I pay off monthly. I don’t earn a huge amount so I’m disciplined in transferring the money from my current account to my credit card as soon as I’ve used it.
Sorry, that turned into a spiel but I remember vividly how utterly draining debt is.
So, for me, 15 years to get to now, but 6/7 years to get to no debt.

I worked out if I pay token amounts (which is all I can currently afford) then I can pay it off in 5 years. My sister is really pushing me towards a Debt Relief Order as she doesn’t think I’ll maintain the monthly payments as I’m so terrible with money but I have a car through work so it’s not allo d for me to sell it plus I don’t want to end up with an old car, worrying at every MOT etc

Re spending, not sure if it helps but I always wait 48 hours before buying something, I decide if I ‘want it’, or ‘need it’, usually after that 48 hours I know I don’t really need it.

Sorry op, I am hi-jacking your thread a little bit! I wrote one similar to yours but didn't get these kind of replies (you are very lucky with the lovely advice here)

I have just been released from bankruptcy, because of financial abuse - so it was lovely for a PP to share their story. I have only just been released and haven't got to the "relief" part yet.
I've been worrying about my credit score too, (which was perfect before this) and im using a lock box to repair the damage.
I just wanted to thank PP for her response re: bankruptcy as it's given me some hope going forward. I've been so lonely, confused and scared.

And just a little correction, a PP said bankruptcy stays on file for 10 year. Its only 6. I was told this by the courts when I was released, very recently.

Please get advice Op, I too buried my head in the sand (slightly different as I was acting on lies from my ex DP who was abusing my financial situation) and ended up in masses of debt and in front of courts. If I had just faced up to it much earlier, it wouldn't have escalated this far.

I went bankrupt in 2011, no credit of any kind for the 6 years after. You lose anything you have of value to the official receiver. This includes any life insurance.

It does take 10 years to build your credit rating up, mines only now good.

If you have no other choice it's the best thing to do unless you own your home. At the time I was renting so I only lost my car. I owned nothing else of any value.

Bankruptcy here too. The relief you feel when you get those papers stamped is unbelievable. 6 years and its off your files. It's hard not being able to get things like mobile contracts, but you get through it. My credit rating is now excellent, and I'm about to get a mortgage.

I can’t go bankrupt because of my car, it’s on a scheme similar to salary sacrifice called car assisted purchase loan. I have a contract with employer, if I sell car I have to pay back all the arrears then and there. My car is now worth less than the loan

Speak to step change, I’m in a debt management plan, I have a lot of debt but this has helped, I can live now. It’s a worry because it’s debt but I feel relief knowing stechange deal with my creditors, I’ve not had a bailiff/CCJ sent to me, I’m on a payment plan with them and stepchange just take the 1 direct debit on payday and sort out who gets what amount. No DRO needed. You can’t take out additional credit as it could sacrifice your plans but it’s an informal agreement and your car would be fine with work

@Ontgedothe

I worked out if I pay token amounts (which is all I can currently afford) then I can pay it off in 5 years. My sister is really pushing me towards a Debt Relief Order as she doesn’t think I’ll maintain the monthly payments as I’m so terrible with money but I have a car through work so it’s not allo d for me to sell it plus I don’t want to end up with an old car, worrying at every MOT etc

To qualify for a DRO you need little or no disposable income or assets and below a certain amount of debt.

If you can pay your debts off in 5 years and meet your normal living expenses, that's actually not too bad. Have you looked at the MSE advice linked to above? There's often loads of tweaks that can make things easier.

The problems to watch out for are most of your debt repayments going on interest, so it takes a long time and/or costs a lot to get out of debt - minimise interest payments all you can.

Also scrimping on normal living expenses to make debt repayments. Obviously you are expected to live fairly simply, but you are allowed to eat a decent quality diet, have your hair cut, buy clothes when needed etc, so if you can't meet essential expenses, that's also a warning sign.

On the matter of your car, if it's a company car as in your employer obtains a car for you to use, pays all the costs and then you pay a contribution for private use and associated fuel, and the necessary tax liability, it won't necessarily stop you getting a DRO if that's the best option and the car is essential for you to do your job.

@BarbaraofSeville it’s not a company car, I purchased it using a car assistance loan from my employer. I did try googling DRO and car assistance loan but I think they are quite rare so I couldn’t find any info online. I own the car but I’m
Not allowed to sell it, if I do sell I have to pay back what I own on the loan

Do you have a complete list with exact amounts you’re owing?
Do you have a list with all your outgoings?
Perhaps we could help you devise a budget or a plan.
I was in a financially abusive marriage myself, I know how hard it is. But the first step is to have a clear picture and then tackle it :)

Can I ask why the credit score matters? I know it sounds silly, but if you are identifying as poor woth money, the last think you need is access to more credit?

I’d advise enailing Stepchange for advise - until you tackle your spending triggers, what you currently have on your budget and what you need to get it down to, you won’t stay out of debt.

If you can realistically pay it in 5 years then a DRO probably isn't the right option but it does depend how reality your budget is.

I'd strongly recommend contacting Stepchange for advice. They will go through your debts and budget and let you know what your options are.

^realistic

@Hagqueen ideally in the future I would like to save up and buy a house, a long way off I know and I know that I need to get better with budgeting to do that.
I’ve tried all sorts in the past and nothing seems to help, I yearn for that instant gratification of buying something then feel crap after as I’m skint. But that doesn’t stop me from constantly doing it

I’ll contact stepchange and see if they can help thank all

Op, I'm so very sorry for keep hijacking your thread here - but for those who came out of bankruptcy- I've been released from mine this month.

I still have phone contract in my name? This never changed. I'm up to date with payments.

My partner is due to come into some money and I'm am going to have a sizable amount to put into a savings account (one of the reasons for my bankruptcy was financially supporting him)

No I've been released from bankruptcy, could the courts still take away any assets I have over the next 6 years?

My partner will be buying a house and we shall have a solicitor draw up paper work to ensure my interest in the property, when I am able I shall join my DP on the mortgage.

I was just wondering if anyone has any experience of assets after bankruptcies?

(Again op, sorry for jumping on your thread, my advice to you is please speak to a debt chairty, before things escalate much further. I sounds like you really are in a position to change things now.)

I’ve tried all sorts in the past and nothing seems to help, I yearn for that instant gratification of buying something then feel crap after as I’m skint. But that doesn’t stop me from constantly doing it

Would it help if you put aside a small affordable pot of money (£20? a month) that you're allowed to spend on anything you want, on a 'when it's gone, it's gone' basis and try and find small cheap things to buy?

Do you have anything you can sell to fund your spending? Do you have loads of stuff cluttering up your house?

Moneysaving expert also has help on the subject of money and mental health. Is there anything useful here:

www.moneysavingexpert.com/credit-cards/mental-health-guide/

When you say “token payments” do you mean minimum payments, or something else?

If I were you, I’d hop over to moneysavingexpert and go on the debt-free-wannabe boards there. You will get some straight talking about your situation but it will help you see what you need to do to progress and it’s full of people in similar or worse situations so you won’t feel alone with it.