Buying a house and Credit History

hsj2011 · 7 January 2011 at 3:34AM

Long time lurker of these forums but first time poster.

We're looking to buy a house in a years time (when we've saved up enough for a deposit) so I apologise in advance that I'll be asking many questions over the next few months as we start to get everything ready.

The first question that springs to mind is regarding credit history.

Background
My OH has only just started building her credit file as she's only just 19. She has an account with Barclays, an account with HSBC and a Capital One Credit Card. The Barclays account is the one she uses the most but isn't on her credit file. The HSBC one is never used but is on her credit file so I've told her to start using the HSBC account.

My credit file is a bit of a mess. I had a bit of debt dating back to when I was 18-22 (About £5k in total. I'm 26 now). About 6 defaults in total, 3 of which have gone off my credit file now, 1 has about 6 months left and one 2 have about 18 months left on my credit file. I currently have a Capital One Credit Card and a Vanquis Credit Card which I pay off in full each month. I also have a British Gas Direct Debit account on my credit file and my Barclays Current Account which has an overdraft.

Question
What things on a credit file are likely to hinder a mortgage applications? Is it just CCJ's or do Defaults affect it too? Is there anything we can do to increase our chances of being accepted for a mortgage? (We're looking at a mortgage for about £60-£70k.

hsj2011 · 7 January 2011 at 1:38PM

Anyone got any advice?

CloudCuckooLand · 7 January 2011 at 1:54PM

Multiple defaults will be a big hurdle. 1 might be seen as unlucky/bad timing.

You are going to need a 15% deposit to counteract the poor credit history.

Keep saving. The more time passes, the bigger your deposit will be and the more defaults will have passed into history.

Don't miss any more credit payments.

There isn't 1 credit file. There are 3 agencies. Check them all.

FantomX · 7 January 2011 at 1:59PM

Sounds like you'll be ok in 18 months time...and will most likely have a larger deposit too.

hsj2011 · 7 January 2011 at 3:38PM

Thanks for the replies. Do you therefore think it will be impossible to get a mortgage with 2 defaults (even with my OH's credit file being squeaky clean)?

mattrobinson007 · 12 January 2011 at 3:50PM

You can find out the answer to this by speaking to a mortgage broker. Then you will know for sure and won't have to speculate. I think the MSE site suggests some mortgage brokers. You can do it over the telephone and there is no charge. Also, if you have a copy of the up to date
credit report then send that to the mortgage broker. The advantage of this is that they should then be able to give you some advice without actually doing a credit search (which would leave a record on your credit file). Like the person above says there are three agencies in this country but usually the credit file the brokers will want is Experian and/or Equifax. The other one is Call Credit. As you probably know you can obtain copies for £2. The only downside is that the brokers will have your contact details so will probably bother you in the future from time to time about getting a mortgage (although that's not necessarily a problem).

property.advert · 12 January 2011 at 4:53PM

I spoke to a broker about a couple of charges put on a property I had a few years ago but which were still a couple of years from "falling off". I was advised that if I had a large deposit (circa 30%+), had no other history, that these issues were from a few years ago, possibly had a decent explanation (divorce) and a good income with decent disposable income and good affordability (low income multiple), then they could get normal market rates.

Buying a house and Credit History

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