Debt management plan and mortgage

[debtordot]

Hello,

through various recent life events, I’m going to have to begin looking into purchasing a property alone. Likely shared ownership.

I currently have a DMP (step change debt management plan) with approx. £20k of debts on, which I have been paying off for almost a year in April.

I’ve always made my payments on time, but occasionally they’ve been a day or two late due to fluctuating salary pay days.

Anyway… I checked my credit score today and it’s absolutely plummeted from 980 to 311 within two months - and from what I can see, this is because of some of my creditors reporting ‘missed payments’ even though they have been receiving a payment towards my debts from my DMP every month.

I am now panicking beyond belief. I’m worried that I won’t be able to get a mortgage to move out and move on with my life after an extremely hard time with my now ex..

A family member has offered me some help to clear the debt management plan in full… but I am seeing conflicting info online as to if this will improve or impact my mortgage chance and I desperately need my credit score to go up, and fast!

has anyone been in this position before and can help advise me?

Thank you

Could you speak to Step Change? I thought having a debt management plan would affect your credit rating anyway. The money saving expert Debt Free Wannabe forum may have more expert advice. Hope it works out.

I've looked at help from stepchange before. Although not as drastic as an IVA or DMO, it still stated that a DMP or any debt management scheme would effect your credit rating. I believe if the DMP is cleared then your credit rate will go up, but it may still be poor until the end of the original term and you may have to mention it on any finance applications. DMP are flexible and designed on a case by case basis, so all you can do is speak to Stepchange again. They should be able to advise.

Thanks both. I have tried to get in touch with step change but they can’t advise me if paying off the debt in full with be better or not, apparently.

I have been trying to google some more and all I can seem to find is that creditors can keep messing with your credit score until paid in full. They are a pain! 😞

There’s a website called Check My File which is worth looking at. It’s £15 a month BUT you get a 7 day free trial (which is all you’ll need). It collates data from multiple credit unions and shows you what is impacting your score etc.

Do you have TikTok? There are some brokers on there that go live every day and you can ask them questions in the comments section. Alternatively, get in touch with a mortgage broker, lots of them are free (as they take a commission from the mortgage company) and they will be able to advise you x

I’m pretty sure it goes against you for 6 years even if paid off earlier. You have to work to slowly build up your credit rating again.

It’ll hit you with interest probably but simply adverse mortgage brokers got me a mortgage with defaults when nobody else could. They were excellent

I think advice on how clearing a DMP might affect creditworthiness would be several steps too risky; too many variables.

Are you paying less now with Stepchange towards the min payments, if so the lenders are correct to report reduced payments. You should really have researched the effects of the DMP before starting - go to the debtFreeWannabee forum on MSE, they were the best of help when I started mine 4 years ago.

Yes I am paying reduced amounts, but have been doing so for almost a year.

When I took the plan out I was living with my now ex, had a home etc so the potential effects of the DMP didn’t matter but obviously that isn’t the case now 😞

We went through this when my husband was on a DMP and all I can say is you really can’t be late with payment at all, regardless of the reason for it. If you have a set date to pay the reduced amount to creditors then that is set in stone and that’s likely why your credit score has fallen so much.
In the event, we had to pay the remaining debt (about 13k in one amount) by being gifted it. Six months on we then began to look for a mortgage and got one.
Don’t pay late! It just looks like you aren’t serious about paying what you owe. No judgment but experience.