Could you please help me get this straight?

MicheH

Right, confused. Muggins here is bankrupt. The only reason i'm bothered about my credit rating is to get a mortgage down the very long line.

So for 6 years (is it from the day of my BR order?) I will have a big fat BR on my file. Yeah?

So nobody is going to give me anything really (I know they probably will down the line but I'm bare with me) while that is still sat there.

So if I keep my mobile contract up or get a credit cashbuilder with one of those payg cash cards i'm not going to really gain anything am I as BR will be there?

Over the years will my credit rating gradually get 'cleaner and cleaner' or will I suddenly go from poor to 'brand spanking new' in 6 years time.

If I don't do anything at all (i'll credit file cleanup after AD I realise) with regards to helping my credit score through these 6 years I wont be losing out or further behind someone in the same situation as me waiting for BR to drop off file.

I'm thinking that it's not worth paying a little more for phone contract or using the cashbuilder facitity to help my score till BR drops off in 6 years time then I can carefully look into ways which sensibily make me more attractive to good mortgage lenders (although I know BR will always hinder me)

So to clarify my waffle, I was thinking of not bothering with any credit building things till BR drops off the file in 6 years time but wanted to know if this would hinder me at all and it actually would be better to keep up contract and using cash builder to help my score now.

philnicandamy

well...."every little helps" wont do any harm to keep what you suggested BUT as you say while the bankruptcy stays on file for 6yrs credit will be difficult but not to say you'd be refused for anything in the future...in the end its all only really damage limitation..

I've been discharged now nearly 3yrs cleaned up my files and a few months ago Kindly Natwest gave me a full bank account with them..everything else in the past i've looked into has been refused

skylight

If you do nothing in six years, you will go from "poor" to "empty", rather than brand new - because you will not have a credit rating!

Your bank account will give you a good rating. Get another basic account if you can; use it for savings or emergency fund. Thats 2.

I have a credit account with Simply Be. Part of the J D Williams group who apparently offer credit to anyone! More good credit. I also have a vanquis credit card; horrendous interest rate but only go this far is you are SURE of yourself - really and truely. I thought I was and my fingers are getting a little warm (stupid cow). (Dont get we wrong, I can afford to pay the balance but what I am re-paying each month is getting higher and higher....) I also have budget car finance putting little green '0's on my file each month - haven't used them for 5 years now!

Its not a lot, but it does mean that when my defaults/BR drop off in almost 4 years I will have something of a great credit history and not just an empty file.

I would steer clear of the cash builder. A good basic bank account in on your credit file and you don't pay for it is far better. Keeping the mobile contract is a good one too.

Amiga

Many moons ago I worked as a Credit Underwriter for loans and credit cards. We were always told to ignore mobile phone contracts (or Comms Suppliers as it showed on our system) due to the fact they were known for bad reporting, i.e Reporting people as late when they weren't and not reporting others!

Now this was just the lender I worked for, and was 6 years ago so things may have totally changed of course. In my view ( and this is just my view, is not qualified at all) I would have thought the bank account woud be ok and as Skylight states if you can get one of them Credit Cards that have awful APR and make sure you put a small amount on it each month ( and pay if off in full) that will help loads. It is important to use it ever month as if you leave it unused it will get reported as dormant on the system( at least the system the company I used for)

MicheH

Fastastic for the help guys. So every little helps, looks like O2 get to keep their customer. I didn't realise you could have more than one bank accounts. I'd like a basic cashminder for a few savings if I could, it's only pocket money though.

Thank you for clarifying the difference between a good credit rating and 'empty'. I makes sense now

Tinytim

Miche,

As far as mortgage lenders are concerned, BR is not the worst thing - that is repo including voluntary repo. There are lenders who will look at a mortgage application three years after discharge and not charge a huge interest penalty. Lending criteria is constantly changing, and is fairly robust at the moment, but there are still lenders who will play ball. After six years, there are a significant number of lenders who will consider an application including some high street names. Over the last year or so this has been complicated by the fact that lenders have suffered forced amalgamations, and consequently lending criteria has changed e.g Halifax, Lloyds TSB, Scottish Widows, Birmingham Midshires, C&G, Intelligent Finance, TMB are now all part of Lloyds Banking Group, but you should still have options.

The big no no in many lenders eyes is a repo or voluntary repo where there has been a shortfall, and that would limit chances far more than BR itself.

As far as credit score is concerned, this tends to be more of a blunt instrument than with unsecured credit. As long as there is one or two agreements showing as well managed, that is normally enough. As Skylight says, a well managed bank account and your mobile contract should be fine, but if you can trust yourself with a low limit credit card such as vanquish, or perhaps a low limit catalouge account, all will help. I have a studio account which was nil balance at BR and hasn't been closed. The credit limit is £100, and if it is still open when I am discharged, I will use that to try and re-build a good rating.

Tinytim

I should add that in the current climate getting a mortgage depends far more on having a huge deposit than anything else, and that will probably be the biggest hurdle for most ex BR's.

MicheH

Hi Tinytim, thanks for replying. I am going through a voluntary repossession but there should be no shortful. This does worry me in the future as it looks so bad, we tried to sell but, anyway. What's done is done.

I know we're going to struggle to get a mortgage but I also know that a house is only a house, it's what you make of it that counts. My attitudes to life have changed now. As long as I was living in an area that I feel safe and secure then I can settle anywhere with my family. I no longer strive for the biggest or newest. I guess what i'm saying that for me it's important to find a little house that I can turn into our home. It's a million miles away I know but i'm planning for the future and never want to make financial mistakes again.

The deposit is a major hurdle yeah. I live in the north east so you'll understand that house prices are a little bit more managable here. While renting and when my children are both in school I will go to university to study midwifery (i'm already studying to improve my qualifications for university level)

I realise that we're looking at a 20% deposit. That's huge but hopefully when I start my new career we should be able to save easily for a while.

I wonder if the fact that they're so many bankrupts, many who have had to be repo'd in six years time the market will be full of us, maybe things and thinking my chage, I don't know. Doesn't hurt to plan though eh? Dreams are what keeps us going half the time.

Tinytim

Hi Miche, congratulations on the studying I am still at the stage of trying to work out what I want to do with the rest of my life. I have been in business for one way or another since shortly after I left school, and wonder if I am actually employable now! Having gone through the last couple of years, I am toying with something completely different, but don't know what.

If there is no shortfall on your repo, then it is unlikely to be a problem beyond the six years, and as you say, lending criteria does have a habit of changing to match social reality. When I left school there was no such thing as credit files, and if you wanted a loan for anything you had to put down at least a third as a deposit. A few years ago it was commonplace for water companies to obtain CCJ's at the drop of a hat, and a few years later there were a number of mortgage companies who started disregarding CCJ's from water companies in their assessments. Even now, there are still many big lender who will disregard CCJ's of less than £250.

pmg19680

Thanks for posting this micheH it was nice to read and you sound like you have the same sort of dreams as me for the future. Hold on in there and everything will work out
Well done on the studying too. :beer: