What's Your Score?
More and more I am hearing from people who cannot meet their monthly obligations to their debts and want to find a way to service the debts without affecting their credit history or credit score.
Bottom line: Anything besides paying the debts in full or making the agreed contractual monthly payments WILL affect your credit history. Unfortunately, it is just the way it goes..
But why dwell on your credit file at this point if you are struggling to meet the obligations. As I have always stated, it is better to deal with the here and now and get the debts sorted then to worry about the credit side of things. This is because once you get the debts sorted, and paid off, your credit will rebound and you can re-establish yourself again.
Of course one other thing I hear from clients is that they never want credit again. I guess so and can understand why, a bit of once bitten, twice shy. Then why the worry about your credit history if you don’t want credit ever again? Confusing circle, but I do understand where they are coming from.
The logic here is that if you are about to default or go into arrears with a debt(s), then worrying about your credit score/history, is not really an issue, as it is going to be damaged one way or another. So getting the debts sorted out through a repayment scheme such as an IVA or a Debt Management Plan, while initially has an impact on your credit, in the long run will help you in re-building your credit and getting your finances back on track.
In the instance of doing an IVA, which can last for five (5) years; one year after the IVA is completed it falls off your credit history; this due to the fact that everything drops off your credit history after six (6) years.
If you use a debt management plan to repay the debts, it can take longer depending on if the creditors cease any interest and charges, and also it is dependent on how much of a monthly payment you can afford.
Keep in mind that you can re-establish yourself once the debts are paid. You can rebuild your credit score and if you want, obtain credit again, but for now, let’s work on sorting out the debts you have now.
Bottom line: Anything besides paying the debts in full or making the agreed contractual monthly payments WILL affect your credit history. Unfortunately, it is just the way it goes..
But why dwell on your credit file at this point if you are struggling to meet the obligations. As I have always stated, it is better to deal with the here and now and get the debts sorted then to worry about the credit side of things. This is because once you get the debts sorted, and paid off, your credit will rebound and you can re-establish yourself again.
Of course one other thing I hear from clients is that they never want credit again. I guess so and can understand why, a bit of once bitten, twice shy. Then why the worry about your credit history if you don’t want credit ever again? Confusing circle, but I do understand where they are coming from.
The logic here is that if you are about to default or go into arrears with a debt(s), then worrying about your credit score/history, is not really an issue, as it is going to be damaged one way or another. So getting the debts sorted out through a repayment scheme such as an IVA or a Debt Management Plan, while initially has an impact on your credit, in the long run will help you in re-building your credit and getting your finances back on track.
In the instance of doing an IVA, which can last for five (5) years; one year after the IVA is completed it falls off your credit history; this due to the fact that everything drops off your credit history after six (6) years.
If you use a debt management plan to repay the debts, it can take longer depending on if the creditors cease any interest and charges, and also it is dependent on how much of a monthly payment you can afford.
Keep in mind that you can re-establish yourself once the debts are paid. You can rebuild your credit score and if you want, obtain credit again, but for now, let’s work on sorting out the debts you have now.
