Credit Rating: How it works and How to improve it discussion area

agrinnall

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Live4dreams

Hi there,

Ive read a few of the threads above and can see people have good knowledge about credit scoring etc! I dont know if anyone could give me some advice?

I fell poorly in 2005 and had no choice but to enter into a Debt Management Plan as being unable to work i was unable to pay my debts off to the full amount each month (i.e. instead of paying 300 i would pay 250). Clearly not ideal however i paid it off last Jan (some 15 months ago) and am trying to rebuild my life(!) - sorry i mean credit score as i would like to in the not too distant future potentially get a mortgage etc.

Im a bit confused on a couple of things:

1. When i entered into the Debt Management Plan i had a student credit card (max limit £400) which had nothing owing on it - so in accordance with the Debt Management plan company's advice, i kept it as technically it wasnt a debt. I also had a mobile phone contract which i carried on over the 6 years (again not a debt), both of which must help my credit rating - am i correct in thinking this or not?
2. What effect/bearing would this potentially have on my credit file and how long does it take to get it back up to normal after a default etc? I appreciate the default etc stays on your account for 3-6 years i believe? But is that for everyone or just those who have got no credit? I.e. would someone like myself who has built up some sort of credit history (unknowingly) be viewed in the same way or will each case be treated individually? (Ive checked my Experian file and it states my credit on there, but also have the defaults from years ago).
3. How long does a default stay on an account for? For example, if my default was placed on at the beginning of the debt management plan would that be the start of the count down or would it be considered the count down time from the day i ended the Debt Management Plan?
4. If a company has put several defaults on the account a, at the beginning of the debt management plan i understand why, but if they then also later down the line, when they know your paying a regular monthly payment and has been agreed put another default on your account - can you contest this with the company in question or someone else?
5. Does anyone have any good tips for how to boost my credit scoring so one day i could buy a small flat/house?

I would really appreciate any advice so i can make a bit of a plan with my life - its been hard work not being able to make any plans because i was unwell and due to not being able to get an overdraft etc as im sure some of you can appreciate.

Tixy

Live4dreams

It sounds like you perhaps haven't got copies of your credit reports? If you haven't then you need to obtain them to have an idea as to what is showing - you don't need to pay the extra for the score just the actual credit report.

A default is entered on your file after a default notice has been sent to you. Typically this is after around 3months of reduced payments under your DMP. However in some circumstances defaults are not applied until quite a bit later than this. Its not unheard of for them not to be entered until several years after you enter a DMP (technically they probably shouldn't be but it does happen).

Defaults stay on for 6years always. Thats 6years from the date they were entered on your credit file.
A creditor cannot put more than 1 default on an account. There is only ever one default registered at a set date in time.

-First get your credit reports and find out what defaults you have and how long until they will be removed.
-Do you still have the student credit card active and could you still spend on it? Have you used it at all since you finished your DMP?
If you still have it and haven't been using it then you could start using it to put one or 2 items on a month and then ensure you pay off the next month in full. This will mean you won't pay interest and will be showing you are handling a credit account responsibly.
If you can no longer use the student card then you might want to consider applying for a sub-prime credit card (see the articles below) to do the same.

Also have a read of this 2 articles about improving your credit rating.
Credit Rating: How it works and how to improve it
'Bad Credit' Credit Cards: Use them to rebuild credit rating

Do you currently just have a basic bank account? If so once all your defaults have dropped off your credit file you might want to ask your bank to upgrade your account from a basic account to a regular account.

JimmyTheWig

The article suggests that we should do this every year - 18 months.
Am I right in thinking, however, that we only get one free trial per agency?
So the first time you do it it is free, but 12-18 months later you have to pay £2 per agency? Or is there a way around this that I've missed.

I know £2 isn't much, but it's the principle as much as anything. You're checking up that companies have done what they have said they would do. Seems unfair to have to pay to do that.

Tixy

Yes you are right you can only have one free trial per agency.
So in future you have to pay £2 to get your reports from each agency. To be fair its far less than you have to pay any other organisation to see all the info they hold on you (which is £10 under the data protection act).

JimmyTheWig

Thanks Tixy. Didn't want to shell out £2 unnecessarily. The article sort of implies you should do it regularly and you can do it for free. Both of which are true, but not in conjunction with each other.

And I agree that it's good value on the part of the credit reference agency. And so I don't know what the answer is.

I guess I believe that if you get turned down for an application (etc) then the company should automatically pass you (for free) the information that it had received from the credit reference agency.

Tixy

That would be a nice idea - can't see it happening though.

sunfug

Hi, just joined this forum thanks for all the excellent information. We are trying to sort out our finances in order to buy a house (me for the first time my wife for the third) and are renting at present. My wife got her credit report from Experian (thanks for the free tip Martin!). To her surprise she was rated a poor credit risk apparently because of recent attempts to get another 0% credit card and to extend her OD.

We need to go through it in detail, but my question is how long does it take to re-build your credit rating?

We were hoping to try and buy a place this Summer but now I'm concerned. In the past she has never had any problems getting credit. Her ex with whom she bought the two houses (now sold) has a terrible CR. They split up in 2003 and she insists that there is nothing to associate herself with him financially, but I'm not so sure. They had a joint bank account and 2 mortgages together with all sorts of ducking and diving shennanigans going on that she only became aware of later.

Appreciate any advice. Thanks.

bcfc1710

Quick queston, im on a DMP with CCCS, will paying them help improve my credit score?

Tixy

bcfc1710 wrote: »

Quick queston, im on a DMP with CCCS, will paying them help improve my credit score?

Depends what is on your file to start with.

Usually shortly after you start a DMP your creditors will send out default notices and file defaults on your credit file (unless they have already done so). Defaults stay on for 6years and having defaults on file means that you almost certainly won't get any mainstream credit for those 6years. But as part of your DMP you agree not to take out new credit until your DMP is fully paid.

How long is your DMP predicted to last? If you pay off your debts before 6years from the default then the debts should be marked as satisfied defaults.

If you had any entries on your credit file such as gone away markers, then once you are paying creditors through a DMP these markers should be removed.