Don’t put off starting a financial management plan because you are worried about the affect the move may have on your credit rating.
The likelihood is your credit rating is already in shreds if you need a financial management plan - and your real worry is starting will stop you borrowing to refinance your debts.
In truth, if you have defaults, court judgements or missed payments on your credit history, you are unlikely to find a lender who will consolidate your debts in to a single, cheaper loan.
If you can, it’s probably not a sound financial move because piling debt up just delays the inevitable day when you cannot meet the payments and makes sorting out your financial problems more difficult.
Taking a practical approach to dealing with debt is much better.
The objective of a financial management plan is not to write off debt, but to reschedule the payments to make it easier for borrowers to meet their commitments.
Lenders will still treat the reduced payments as a default on the account because you are more than likely failing to meet the minimum repayments.
It’s not the financial management plan that gives you adverse credit - it’s the level of payments and you would have probably have missed or paid less without the plan anyway.
You will receive a default notice through the post and the action will be noted on your credit file, which will make getting credit more difficult - even simple transactions like opening a mobile phone account or paying car insurance by instalments could be affected.
A financial management plan will affect your credit history for several years as every reduced payment is noted on the file.
However, it also counts in your favour because lenders can see you are managing your debt instead of failing to face up to your responsibilities.
Just remember it was unmanageable credit that put you in to debt, so every financial management plan payment is a step along the way to rebuilding your financial status.
Another point is your credit history is only important when you need to borrow, so a financial management plan will make you live within your means.
Coming to terms with your money problems is the first step towards sorting them out, and the earlier you take action and find out if a financial management plan is right for, the better.
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Notes to editors:
- Money Debt and Credit is one of the UK's fastest growing financial solution companies.
- The company was founded in 2006 on the belief that every client has the right to appropriate financial advice. Since then we've gone from strength to strength and have helped thousands of people with a variety of financial solutions.
- We offer a range of services including Financial Management Plans, Loans, Mortgages, Full & Final Settlements, Bankruptcy, Investments and Pensions.
- Specialties: IVAs, Financial Management Plans, Loans, Mortgages, Trust Deeds, Full and Final Settlements, Bankruptcy
For more information or debt advice contact:
Money Debt and Credit
45 Clarendon Road, Watford, WD17 1SZ
Tel. 0800 16 999 46
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