Improve your Credit Rating after a DMP
After you have completed a Debt Management Plan there are a number of things you can do to improve your credit rating. However you will need to wait until the Plan is finished. While you are in the Plan your credit rating will remain poor. Every time you make a reduced payment even though agreed it will be recorded on your credit file as a missed or part payment. These records will only stop being added to your file when your debts have been settled or paid in full.
Improve your Credit Rating by using credit responsibly
One of the main problems you face in terms of your credit file after you have completed a Debt Management plan is the fact that you have no history of using credit responsibly. The fact that missed payments are no longer being recorded against you is only half the battle.
To improve your credit rating you now need to start building up some records of payments made on time so that other potential lenders will start to trust you. There is nothing better as far as potential lenders are concerned than seeing a history on your credit file of debt repayments being made in full and on time.
The issue of course is how do you do this if you cannot get credit. If you have no credit facilities how can you start building up this good repayment history? It is unlikely that your bank will give you an overdraft or credit facility at this time so what can you do?
Use a credit repair credit card to improve your Credit Rating
One line of credit that will be available to you after you have finished a Debt Management Plan is known as a credit repair credit card. These credit cards are offered by a number of banks and you can apply for one even though your credit rating is currently poor.
Initially you will be offered a small credit limit of between £200-£500. However this does not matter. You simply need the card to use it and repay it. Once you get your card you must make sure that you only use it for expenses that you can afford repay in full at the end of the month. In this way you will not be at risk of getting back into debt. In addition you will never be charged any interest which can be as high as 40% APR on these cards.
As long as you use the card in this way you will build up a history of responsibly borrowing and repaying credit without ever getting into more debt. As a result you will improve your credit rating.
It takes time to improve your Credit Rating after a Debt Management Plan
Once you have completed a Debt Management Plan it is important to remember that you will not be able to improve your credit rating overnight. Even using a credit rating repair credit card it will probably take 6-12 months before your credit rating is good enough for you to apply for different types of credit and even then there is no guarantee that you will be successful.
Only after the records about your old debts have been taken off your credit file completely will your credit rating be totally clean again. That could take up to 6 years from the end of your Plan.
DM4U Tip: Do not be fooled by claims by any company that they can offer you a service which will repair your credit file quickly. There are simply no short cuts. However by using a credit repair credit card responsibly your chances of repairing your credit rating over time will be greatly increased.
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