Taking out a credit card while on a DMP

A question about : Taking out a credit card while on a DMP

Hi everyone,

Myself and my husband have a DMP with Payplan and have been paying it for the last year and a half. Apart from a few initial glitches, it has been going very well. We have just had an annual review and managed to increase our monthly payment but at our current rate it will still take us about 4 years to clear the debt.

We are desperate to move house to a nicer area, especially as our kids are heading towards secondary school age. Ideally we would love to move as soon as our debt is cleared but realise that we might have problems because our credit ratings will be badly affected.

So I wondered if it would be a good idea to take out a credit card just now - purely for the use of purchasing petrol and food each month and clear the full balance each month. We would ensure that the credit limit would be really low so we couldnt run up any more debt.

Would we be allowed to do this and would it help with our credit rating? I know we would be restricted with who would actually give us a card anyway.

Best answers:

• A DMP is an unregulated agreement between you and your creditors, you are free to apply for a credit card should you wish, though I doubt you would get one seen as you probably have defaults on your credit file, and they will be there for 6 yrs, if you did get one and pay it off every month, it would help with your credit rating, but not significantly.
• You're still in your DMP and talking about moving to a nicer area and getting a credit card. In other words, you're still in it up to your neck but you want to take on more debt.
  Sorry to be blunt, but wait until you are clear of your current debts before taking on any more.
• Taking on more credit during a DMP may cause it to be cancelled.
  Yes you say you will only use it to buildup your credit rating, but you have shown you were not good at handling credit previously.
  So don't do it, basically.
• With respect...did you have credit cards last time and if so...how did that work out for you? By the fact that you are in a DMP, you have already demonstrated that you were, at best, a little reckless with your money, or you wouldnt be in this mess. I would think twice if I were you, or there is a very real chance you will end up right back where you started, just with twice as much debt as before.
• I believe it will breach the terms of your DMP to take on further credit.
  Apart from that I doubt you would get one anyway as there are bound to be fairly recent defaults on your credit record as you have only been in your DMP for approx 18mths.
• as previous posts have said if you are on a DMP through any company you are not supposed to be in a position to take on any more credit ..i was told it would cancel out my agreement
  ..either that pay extortionate % rates on one that lends to those on DMP / poor credit history
• I'd wait until you have a year or less to go. Your children will be better off with parents who have no money worries than going to a (maybe) marginally better school with mum n dad still in hock to the banks.
• I'd echo what others have said. Don't do it. It's far too easy to have a card for xyz but then just not quite pay it one month, then the next and before you know it you're up to your neck again.
  As things stand it seems like your situation is fairly stable. I'd not want to rock the boat.
  As for the school, again I'd be wary. Ratings go up and down all the time. Schools are judged on exam results and the show they put on for the day the inspectors call. If you can support your children in their education there's absolutely no reason they won't excel and with an internet connection a world of information is at their fingertips. The school my teens attend was mediocre when they started, both put in the work with support from us and both are looking at excellent grades at GCSE. They ask for help from teachers and it has always been provided. In the last 4 years the OFSTED rating has hugely improved. I think we focus far too much on the school and forget our children are individuals and just need the right guidance. YOU can give them this without it costing you a penny or causing the stress and upset of a house move and potential further debt.
  Kate x
• Thank you everyone for your comments. I had a feeling you would all advise against the credit card. My husband and I are adamant that we want out of this mess and never get into any unnecessary debt again in the future, but you are all right - it is still early days and what if we did need extra cash one month, there was a house emergency etc. I know the temptation would be there to use the card. If it wouldn't greatly improve our credit rating anyway, then there is no point.
  We will continue to manage the DMP and have to cross the bridge of remortgaging etc later on.
  I'm glad I posted here as I might have gone ahead with a credit card application otherwise! I also didn't realise that it may jeopardise the DMP.
  But can I ask ....
  We have a few small debts included in the DMP which are literally a Ј200ish. If we had the money to clear these can we go ahead and do that? This would mean we could then keep our monthly payment the same but more would go to the other bigger debts and everything would get paid off a bit quicker.
  My husband can sometimes earn a wee bit of overtime but it's not regular enough to be able to increase the monthly payment. But we would like to put the extra money to good use to pay off a bit of our debt.
  Thanks
• Poppysmurf:
  Sorry just re-read your comment. I don't think you read my original post correctly. I am not looking to move to a nicer area just now, but it is what I would like to do once my DMP is cleared. I was merely concerned at this stage about my credit rating and how it may impact on my me in years to come, long after the DMP is finished. I just wondered if I would do anything just now to help that so I can make positive choices in the future. I want to be able to choose where I live in the future and we are learning a very big life lesson right now with regards to our previous spending.
  You don't know the circumstances of my debt or anything about future job prospects, where we would like to move and whether it will be a huge jump in mortgage etc. I appreciate you being honest with me but I don't appreciate you being condescending!
• My point is ... Your answer alluded to the idea that I was looking to moves right now and take out credit cards willy-nilly!
  If I wanted to do that I wouldn't be on here asking for constructive advice from people that have been in similar situations, I would just have applied!
  I know exactly how I got to where I am now and I also know what I want for my future. I'm not being deluded or over-ambitious either.
  I appreciate people giving me facts and constructive advice, perhaps we will need to agree to disagree but I didn't find your comment constructive one bit! Other people advised about the DMP and the effect do taking extra credit, schooling etc. and that was greatly appreciated. You were condescending!
• Ok. So you're not on a DMP, you never mentioned moving house, you aren't up to your neck in debt, and you're not looking to take out another credit card. Anything else I got wrong?
• You are clearly not able to give or take constructive criticism, I'm sorry but I'm not willing to go around in circles explaining again and again the reason for my original post. Read it whatever way you will. I am not a stupid person, I admit I have made mistakes in the past but who hasn't? I have got the advice I needed from others and I think if you are going to use your time to contribute to these forums, at least read the info correctly and be helpful not critical of others.
• Hi Clairebear and welcome to MSE
  Can I suggest you come and join up on the DMP & Mutual Support thread:
  https://forums.moneysavingexpert.com/....php?t=4437925
  Everyone there is either on a DMP or has been in the past. There is no judgement, just solid help, advice, experience and support.
  We would love to welcome you there.
  TTFTM x
• Hi ClaireBear
  I took out a credit card out of desperation back in January, the reason being that when I travel with work they will not always accept my works Amex card in India - the last time it happened I had to ask a colleague to pay my hotel bill for me
  However, on reading my DMP agreement once more (with Payplan) I noted that this was in contravention of the agreement and so cancelled the card - I was leaving my job in any case so was not worried by that point.
  Anyway, please be aware that Vanquis would only provide credit of Ј500 in any case on initial acceptance so this would be unlikely to cover many bills. Additionally if you do decide to improve your rating by taking out such a card I would wait until nearer the end of your plan - at least then if your contract with Payplan was put in jeopardy you would be able to manage the last few months yourself.
  Nonetheless, credit is far to tempting - my husband can still get credit as we have no financial associations - it is still way to tempting
  Conclusion - take out the card in the last year or so if you need to although I doubt your credit ratings will be anywhere near good enough for a new mortgage unfortunately, at least not an affordable one
  Regards
  ST