Today I am going to talk a little about how I have planned to repay the debt I have accrued and why it is an important part of my overall plan to rebuild my credit. Debt has a negative effect on your credit rating and so when you are planning to improve things, sorting out your debts is one important aspect towards a better creditworthy future.
I currently owe around £26000 which might scare some of you, however this figure was actually much higher when the problems all started some years ago.
Well as simple as this sounds the plan is to repay my debts. It sounds simple but at the same time it is going to be difficult. Difficult because it means being extra disciplined with money in order to repay my debts.
As each debt is repaid the default associated with them will be marked as satisfied. Whilst this is still bad it will begin the healing process. Eventually these defaults will drop off from my report (usually after 6 years from when they were registered).
How I planned
I got a list of all my debts and made sure that the outstanding balances were up to date. I then put the debts in order of priority and worked out which debts I could pay off over the next three years. The aim is to settle all of them by September 2020.
The other part is to continue monitoring my credit report. I use the free monitoring options from Clearscore and Noddle. I have also written a little Noddle Review if you would like to find out more by the way.
When monitoring my credit report I making sure of the following: –
- That the balance being reported is correct.
- That when a Debt is Paid the associated default is marked as satisfied.
PS you can also get your Statutory Credit Report as well. Follow the link to a blog post I have written about that.
Another aspect of my plan is to build up my credit with the accounts I do have. These are accounts that are not in default and are up to date.
I currently have a Capital One Credit card which I am repaying each month. I use this sensibly so at least some good data (that I have repaid on time and managed my card) is reported on my credit file.
The same applies for my Vanquis Credit Card and O2 Mobile phone contract. By the way I have a Capital One Credit Card Review on my blog if you would like to find out more!
The next phase is aiming for a third credit card to continue my quest in rebuilding credit. As it stands today my credit is too poor to do this. Let’s see how things improve over the next 12 months.
The plan in effect is very simple: –
- Repay my Debt over the next three years.
- Keep on top of my existing Credit Cards and Phone Contract.
- Monitor my credit report for changes.
It is going to take a few more years before I can attain a decent credit rating. However between now and then let’s see how it can be improved.