Credit Score Help for debt free person! Please Help!

DesperateHousewifeWannabe

Hi eveyone,

Not posted on here before so please let me know if you need more information.

I have been a total moron with regards to my finances in the past, and about 2 years ago I had had enough and so concentrated on paying off as much as I could and as quickly as I could.

I am now debt free, but my credit score has taken a hammering. It is extremely low. I have no CCJs, I have about 7 defaulted accounts and 5 satisfactory.

I have paid off all my debts now (yay!) and there are 3 accounts which haven't updated on my record yet, but I have spoken to them and have got written letters confirming settlement, so they are hopefully in the process of getting them ammended.

My partner and I recently applied for a mortgage and were refused, which we were both expecting anyway but unfortunately had found the perfect house and thought we would give it a go.

ANYWAY - My question is how do i improve my credit score if I have no outstanding debts/available credit? I am on the electoral role, I have paid everything off. My credit score is too low to take out any sort of credit which I can then pay off regularly to bump the score up. I am at a loss. We are intending to buying a house in 6 - 8 months time, and we were told it was our credit scores which let us down this time round.

Please advise. I know I made some really stupid decisions, but I have turned over a new leaf, and my current finances shows this, but how do i get my score up to show this with no debt, and not able to take out any more?

Thanks in advance

comedy_dave

Hi DHW.
I'm in a similar boat, except I have only recently moved in with my GF and started seriously clearing my debts and fixing my credit rating to get a Mortgage in 3-5 years time.

Others may correct me on this, but even in the worst cases, you should be able to take out an Extremely High interest rate card to build your Credit Score. Martin does have a tool for finding the right one on the website - http://www.moneysavingexpert.com/cards/bad-credit-credit-cards
The important thing to remember is not to miss a payment on this, or the interest will cripple you. Buy 1 thing on it a month - Weekly shop, A CD, Tank of Fuel etc. and then CLEAR THE BALANCE every month. Do this for around 6-12 months and you should see a marked improvement in your credit score. (This is What I am Planning to do throughout 2011 once my debts are cleared)

Should you feel you are unable to get one of these cards, DON'T EVEN APPLY, it will damage your credit rating further to get rejected. Instead, take oput one of Martins recommended pre-pay Mastercards and just leave it ticking over. They cost a small monthly fee, but each one successfully paid will class as a cleared payment to a credit card account on your rating. You may end up paying £50-£100 for what seems to be nothing over 12 months. But think of it as buying yourself a fixed credit rating.

Hope this helps. I shall be on this route starting hopefull in November if all goes well with my repayment.

DesperateHousewifeWannabe

Thanks for the reply Comedy Dave!

I doubt very much if I would be eligible for any sort of credit at the moment, and I know what you're saying makes total sense, but I'm so scared of taking out more credit! Despite knowing I would treat it completely differently now...

Do you know if a credit score increases just by being debt free?? I've checked it 2 months in a row, and it's gone up by 30 points, but at that rate, I wouldn't even be in the 'Poor' catagory for another year, and we're desperate to own our own house!!

Good luck with your debt clearing. It's the best feeling ever when you know that last payment is made! My partner has cleared thousands in the last couple of year, and he's only got a little bit to go, but I'm really proud of ourselves

comedy_dave

As far as I am aware, you need to have credit to have a good credit rating. A freind of mine has never had a loan, and got refused because he had no history.

A CSO at Lloyds explained to me once that the best thing to be doing for a credit rating and thier scoring system is to be spending and returning to zero every month. This will show good dicipline, whilst also demonstrating a willingness to use credit wisely.

If you are scared of taking out credit, take out a prepay card, it won't be credit scored initially, but will put good payment entries onto your credit report (bearing in mind that your credit score and report are 2 seperate entities)
This will in turn hopefully drive up your credit score a lot quicker. Once you get it into the "poor" range, speed up the process by taking out a high rate card.

Hope this helps.

CD

Britwife

Your defaults are going to bring your score way down and you said 2 are listed as not satisfied. It may go up a bit after they are changed but you won't see a big jump in score until nearer the time your defaults come off.

How long have your defaults been on there?

savingmummy

well done being debtfree!!! You have done really well.
Defaults stay on for 6yrs.

http://www.moneysavingexpert.com/loans/credit-rating-credit-score#checker some info here about credit score/how to`s

Rachie004

Hello - I'm not trying to hijack the thread but I too have a query on improving my credit rating

I have 61 linked addresses recorded on my report.
I've lived at 4 different places in the last 5 years and I can see whats happened - the two flats I lived in had varying ways of the address being registred with different organisations they're logged as different addresses. My last flat had two different postcodes. Will this affect my credit rating? Should I right to the agency and have them add a note to show that the different variations are actually all one property?

Also my report shows 3 searches in the last 3 months. One from Santander where I applied for a new interest free card (and haven't heard anything since) and 2 from insurance quotations. Is getting insurance quotes affecting my credit rating?

Also is there anything better than a 'satisfactory' sticker next to your accounts?

DesperateHousewifeWannabe

Thanks for the replies, and I don't mind being hijacked!

I've got about 2 or 3 of those defaults that can come off in about a year or so, 2 or 3 in 2 years and the rest have got about 3 or 4 years left on them.

I was aware they're on there for 6 years, I've got keen eye on the ones getting ready to come off!!

Is it really just a case of waiting for it to gradually increase?

Maybe on a different note then, are there any suggestions re getting a subprime mortgage in the current climate?! Not that I'm impatient or anything...

spongebobfancypants

What is a sub prime mortgage???? we are in the same position! just seen a mortgage advisor today, i have 1 default for £790 last year what is settled and he advised me not to go on the mortgage application! Can 1 default seriously have that much effect on a credit report??????

DVardysShadow

Rachie004 wrote: »

Hello - I'm not trying to hijack the thread but I too have a query on improving my credit rating

I have 61 linked addresses recorded on my report.
I've lived at 4 different places in the last 5 years and I can see whats happened - the two flats I lived in had varying ways of the address being registred with different organisations they're logged as different addresses. My last flat had two different postcodes. Will this affect my credit rating? Should I right to the agency and have them add a note to show that the different variations are actually all one property?

Also my report shows 3 searches in the last 3 months. One from Santander where I applied for a new interest free card (and haven't heard anything since) and 2 from insurance quotations. Is getting insurance quotes affecting my credit rating?

Also is there anything better than a 'satisfactory' sticker next to your accounts?

Then don't hijack the thread, but start a new one please.

Jo1972_2

Hi, I don't know if anyone can help, but via a DMP, I paid off all my debts, finishing in Dec 2008. All accounts were marked as settled but today I found out that Abbey National have added a default to my credit report for a loan that was settled in November 2007! Can they do this, 3 years after the debt was settled??