Full and final settlements

Hello

Please could someone give me a little advice on what partially settled means in reference to my credit rating and how long it would take for my credit rating to improve.

A little back story i lost my job a few years ago same time as being a new father and first time home buyer. My income was £900 a month my outgoings where £1800 so after a few months of this living off credit card for food fuel and general bills it mounted up. This was roughly 3 years ago and i have not been making payments the debts have been sold on and i am in negotiations for full and final settlement offers one offer has been accepted but as a partial settlement. they say the default will show on the account for 6 years does this mean my credit score will be bad for the duration of the default.

Many thanks

Comments

  • National_Debtline
    National_Debtline Posts: 7,998
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    edited 1 February 2016 at 1:06PM
    Hi

    You don’t actually have a credit score which potential lenders can see. When you apply for credit any lender would look at the information on your credit file and interpret it in their own way so it’s difficult to give you an exact answer.

    In general a partially settled debt might not be quite as good as a fully paid off debt when creditors assess your file, but it’s better than having an unpaid default. The default will remain or your credit file for 6 years from when it was originally put on there regardless of whether you pay it or not.


    James
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
  • llmavrickll
    llmavrickll Posts: 5 Forumite
    edited 1 February 2016 at 1:15PM
    James

    Thank you for your response. The reason i ask is my overall goal is to move house once i am in a better position with the credit score to do so. Obviously if you have a score of 220 on equifax like me at present would probably not be accepted for a new mortgage and if i was it would likely be at 50%.

    So will the remaining balance show as default for the 6 years ? and will my creit score start to increase over the 6 year time.

    Many thanks
  • sourcrates
    sourcrates Posts: 28,711
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    edited 1 February 2016 at 4:28PM
    James

    Thank you for your response. The reason i ask is my overall goal is to move house once i am in a better position with the credit score to do so. Obviously if you have a score of 220 on equifax like me at present would probably not be accepted for a new mortgage and if i was it would likely be at 50%.

    So will the remaining balance show as default for the 6 years ? and will my creit score start to increase over the 6 year time.

    Many thanks



    Hi,


    I don't think you understood James response to your post.

    Credit scores do not exist, no one sees that fictitious number but you, its your credit history that counts with a lender, not the number made up by Equifax.

    All defaults stay on your file for 6 years, regardless of whether they are paid off or not, once gone, there gone for good.


    Just make sure you pay your bills on time, no more defaults, don't borrow money in excess of your income, common sense things like that, time will heal your credit file.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • National_Debtline
    National_Debtline Posts: 7,998
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    Sourcrates summed it up there. Mortgage lenders will look at a variety of things when you apply for a mortgage such as the size of your deposit, your monthly income and expenditure, stability of your income etc, as well as your credit history. Whether they decide to give you a mortgage or not is down to their own assessment of all of that information, not a score created by Equifax.

    If, for example, the default was added to your credit file around three years ago when you got into difficulty it would stay on there for another three years, six in total. If you go ahead with the full and final settlement it should be updated to show partially settled, which might look better to potential mortgage lenders. Whether that tips the balance for them to give you a mortgage or not is really up to them though.

    James
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
  • Hi - I would deal with an independent mortgage broker and explain the situation and finances. They are in the best place possible to be able to guide you through various lenders and what the options may be. Often, they don't charge for the initial meeting too.

    It certainly set my mind at ease.

    Thanks

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