FTB but with poor credit history

Preacher83

Hello, myself and my fiance! are first time buyers and we have found the house we want to purchase, but are having difficulty getting a mortgage. We have a 10% deposit, and need to borrow £136800. I earn £16800 per year before regular overtime (with OT I earn approx £1800-£2000 pcm after tax) my fiance! earns £17900 per year. As far as we are aware, she has a very good credit history but we are in the process of checking it now via experian just in case, I however do not. I do not have any defaults against my name, but I have a low credit score that puts me in the "very poor" category.

We tried to provisionally apply for a mortgage with Coventry Building Society and were failed on the credit score, and are now trying to see what our options are in terms of lenders, without going to so called "Specialist Lenders" such as GMAC who will charge an obscene rate and huge fee's for every aspect of the mortgage.

What can I do to improve my credit score immediately, and does anyone have any advice on what to do in this situation? We have found our dream home after looking for a long time, and it is frustrating us that the final hurdle may keep us back.

What we find bizarre is that in January we were looking into the Homebuy Direct Scheme and talked to an IFA then. He was able to get a decision in principle for a mortgage of £175000 from Natwest. While we had a bigger deposit, this came from the government scheme (£75000 or so). We ended up not going down this route because we were not comfortable with that level of debt.

These are the items that I know to be accurate:

- Current Account with large overdraft (now closed)
Previously I had an account with Abbey that had a large overdraft (<£1000) I tried to switch this account to Barclays, who would not give me an overdraft. This account was left open with very few credits going into it, as I could not afford to pay back the overdraft due to other commitments. Eventually this came to the attention of the Abbey collections and recoveries department and a deal was struck where I agreed to pay back a certain amount per month, but with a new job I was able to pay off the entire amount much sooner and this account was closed this month. It still shows as open on my credit report with the balance outstanding.

- Credit Card (paid off in full)
Similarly to the current account, this account had a balance near max most of the time, without going over the agreed limit (£500). This has now been paid off in full, again this month and I will be closing this once the bank decides to agree I have paid cash into it (I always though cash cleared instantly!) This is still showing up as open but with a full balance. This account has always had a regular payment into it thanks to the direct debit set up for the minimum amount.

- Loan Account (Open)
I have a Loan account with Abbey currently around £4000. I had problems with the direct debit not being taken at the beginning of this year due to it being cancelled, though I myself did not cancel it. I do not know why it was stopped and am currently trying to find out who did stop it from both Barclays and Abbey. I caught this when I noticed a direct debit had not been taken when I checked my online banking so I rang Abbey and found the account to be 2 months in arrears and so I immediately paid it off bringing the account back up to date. This does however show on my credit file as being 2 months in arrears and 2 missed payments, it does not currently show that I have brought the account back up to date. Is there anything I can do about this or will I just have to accept that as I did not raise an alarm when the debit was not taken in the 1st month it is my fault?
There is currently a claim going through Consumer Credit Services on this loan, as PPI was added even though I declined it. Having spoken to CCS today, they say Abbey has told them PPI is not on the loan but my original paperwork says I declined it, but the copy from the bank says it is on there.


I have a Phone Contract for £15 (never goes above this) that is paid on time each month.

I also used to have a gym membership that was some hassle to close, and ended up with the gym sending it to a company called ARC Credit services who I ended up paying before they sent over the bailiffs to recover money I apparently had not paid the gym when they took so long to close the membership. Neither of these show on my report.

I think the amount of debt I have as well as the missed payments contributes to my overall low credit score. During the period May to August 2009 I was unemployed so my income was also severely diminished, being only JSA and housing benefits and I had to borrow money from my fianc!e to cover my debts until I could get back on my feet jobwise and financially. This obviously has had a knock on effect which I have only now really recovered from.

To sum up, I have a poor credit history but my fianc!e does not. we are trying to apply for a mortgage but are not having much luck. does anyone have an advice on a reputable lender in this instance, or how to raise my credit score quickly?

herbiesjp

Read here.

You do not have to worry about getting a mortgage from GMAC - where did you get the idea from?

Preacher83

I used to work for a bank as a cashier, and we regularly used to get people coming in trying to leave gmac, only to find it would cost them a lot to do it, normally around £4000 in closing fees.

The last thing I want to do is use a company like them to help me buy a house and then be indebted to them with a 12% mortgage. I didn't however know they had ceased being a lender to new buyers.

herbiesjp

Preacher83 wrote: »

I used to work for a bank as a cashier, and we regularly used to get people coming in trying to leave gmac, only to find it would cost them a lot to do it, normally around £4000 in closing fees.

The last thing I want to do is use a company like them to help me buy a house and then be indebted to them with a 12% mortgage. I didn't however know they had ceased being a lender to new buyers.

Most lenders/deals will charge you a fee to leave if you are still in an incentive period i.e. during a fixed or tracker rate - this is not a GMAC exclusive fee.

Even the bank you worked for will probably have charged people if they wanted to leave a deal early.


You need to get copies of both credit files and then discuss your scenario with a good whole of market adviser - try and find out why you have a low score, try and rectify if possible i.e. go on voters roll, and then re-apply.