Getting a loan with a bad credit history

efcman25

Hi all,

I suppose this is a regular post on these forums but here goes... I'm a 25 year old male who is looking to get a sizeable loan for a car... my credit history as it stands isnt the best, I have 2 defaults... one for £180 to 02 and one to RBS for £800... both occured due to being made unemployed some years ago.

I have basically sat them out hoping it wont effect me because I've never really needed credit since I already have my barclaycard.. untill now.

the defaults were placed on my file in 2006 after i was unemployed and went through some problems. I was hoping the bank charges case would clear the RBS default since its mainly overdraft and failed direct debit charges which took it to -£800 before I defaulted. With this not being an option I'm wondering what my best plan of action is. I was told they will be removed after 6 years even if unpaid but this doesnt sound realistic.

I have seen some dodgy looking car loan sites like carloans4u which say their typical APR is 12.9 with poor credit history on moneysupermarket but I doubt this.

Anyway I'm looking to get a loan in the next 6 months and im wondering what my best plan of action is, should I add a credit file note to the defaults and explain my redundancy ... and should I pay them off?

My current status now is 25 years old, good profession, £30,000k Salary, Tenant in furnished accommodation and looking to get a loan around 10k with payments of around £300 PM max.

Also, my girlfriend is offering to get a loan out for me, she is just turned 21 and is with natwest and has been offered credit services... I dont really want to go down this route and I dont think natwest will give her 10k anyway...but if its my only option then I may aswell.

all my credit history besides the defaults is good and payments up to date on about 7 credit services over the years such as credit cards/loans(before default)/utilities and catalogues.


Anyway, what should I do.. thanks

Tixy

Well a satisfied default certainly shows as better than an outstanding default.

You have been advised correctly that they will drop off after 6years, paid or not.

If your current account with your existing bank has been well run, they are often the best place to try for credit.

A £10k loan is quite sizeable on your salary, what other credit accounts do you have that are not closed? How close to the limit are you on your barclarycard? Any recent credit applications showing on your file? These type of things will affect you ability to get a loan at all (never mind at a decent rate).

If you cannot get an unsecured loan then you may be able to get secured finance (a HP) from a dealer. There is less risk to the lender (as they can reposses the car) and so you may be more likely to get the loan - however these can work out expensive.

Personally I would never recommend anyone taking out credit in their name for someone else. Circumstances change and this kind of thing can create all sorts of hassle (if you split up, if one of you loses your income etc)

Do you really need a loan for £10k, do you really need it now? Could you not by a cheaper car, or save up a bigger deposit for a few months (out of those monthly £300s)

efcman25

Hi,

my current account is with cahoot and they do not offer loans to my knowledge.

what loan size would be more realistic? I take home nearly £1900 a month so £300 sounds manageable to me (I actually saved £3000 putting this much away to recently clear two of my credit cards, capital one and vanquis due to high interest). I unfortunately closed the accounts once paid and have since been told I should of kept them open as it shows available credit.

My limit with barclaycard was recently reduced to £400 from £2000 and my balance is 0, its a backup.

I did apply for credit last year and was rejected but nothing in the last 12 months.

so actually paying the £1000 off the two defaults would be a benefit? how much of a benefit????

Also is seems overly complicated getting intouch to pay these defaults off, i tried once and got lost with the details provided on experian.

thanks

efcman25

So will my chances of getting a car on HP/loan increase by paying the defaults off?

never-in-doubt

efcman25 wrote: »

So will my chances of getting a car on HP/loan increase by paying the defaults off?

No - a default is scored as adverse whether paid or outstanding - it'd be pointless right now and a waste of money, especially being you actually need money right now

You should order your Experian / Equifax credit files and see what data they have about you, don't keep applying as this will just lower your score so hold fire a week and send off for your credit files then we'll be able to advise better. The loan amount is small in comparison to your salary, based on the fact that is your only available debt - different if you had 5 cards with balances, you don't.

Have a read here and learn about CRA's: Credit Reference Agencies

efcman25

I am a current experian member and do access my report, They were the ones who suggested I put a note next to my defaults explaining why I got them due to being made unemployed.

I have not yet applied for anything as I wanted to make sure It's even an option.. I'm considering going to local dealers and asking them what are my options to them with my current credit score.

I could start saving again... but its a long process and I dont really want to wait 2 years to buy a car.


I also dont think its right getting the loan in my girlfriends name and will steer clear of that option.

At the moment it seems as if my hands are tied and I cant do nothing untill 2012.