Will default scupper my chances of mortgage acceptance?

edinburgher

My GF and I are looking to buy a property next year and I'm petrified that a default from 2006 will scupper our chances. The original default amount was for just over £5k, although the account has now been satisfied.

On the plus side, we're both employed in government jobs in areas where I'm as confident as I can be that the cuts won't involve our jobs, aren't looking for a big mortgage (probably no more than £120k vs combined salaries of just over £50k) and should have a deposit of £15k or so.

I'll have been in my current job for three years then and do have current credit history of successfully paid off credit cards/hire purchase agreements/mobile phone contracts etc. My GF has the same and has no adverse history.

How big a deal will a 5 year old default be to lenders?

Funkygibbon

When in 2006 was the default because after 6 years they are removed from your credit file. Wait until it is removed from your credit file and it won't be a problem.

badmoon

As Funkygibbon says after 6 years it'll come off your credit file, if you'd like to give it a go before then, you could speak to a mortgage advisor who deals with the whole of the market and potentially also those with issues with their credit and they'd be able to give you a more informed opinion.

I had a default on my equifax file that came off my file in January this year. I applied for a mortgage with the Halifax last October and there were no issues whatsoever despite my concerns about this. (It was for a lot less than £5k though) When I looked into it, it turned out that the Halifax only search with Experian so that could also be worth looking into as well to see if it's showing on all the CRA's records for you.

Good luck.

Experian_company_representative

In my experience lenders tend to focus their scoring on your most recent credit history, so I doubt a satisfied default from about five years ago would have a large impact to be honest. Probably a good idea to mention it to the mortgage lender before you apply. Also, if there were circumstances surrounding the default that might help if explained, you can add a short note to your credit report to do this.

James Jones
Experian

beecher2

Was the default satisfied 5 years ago, or more recently? It isn't clear from the first post.

TMoose

beecher2 wrote: »

Was the default satisfied 5 years ago, or more recently? It isn't clear from the first post.

This doesn't matter. The date registered on your credit file is the date the default was issued, when you settle, the "settlement date" shows as the date the default was issued, and thus will drop off after 6 years.

beecher2

TMoose wrote: »

This doesn't matter. The date registered on your credit file is the date the default was issued, when you settle, the "settlement date" shows as the date the default was issued, and thus will drop off after 6 years.

I didn't realise that - I thought it was 6 years from when they were settled. Thanks for that.

edinburgher

The default was satisfied recently, but as TMoose says, it doesn't matter when it was satisfied (just when the default occured).

I'm bumping this back up in the hope of some more comments, but thanks to all those who have posted so far.

At the end of the day, another year of saving (with the larger deposit we'd collect) isn't going to kill us

luckyfool

When it was satisfied will not impact on when it will drop off the credit file, but it will have an impact on how lenders view it if you apply while it is still visible.

They will view a default registered 5 yrs ago, and satisfied 4-5 yrs ago much more favourably than one registered 5 yrs ago, and satisfied 5 minutes ago because you are applying for a mortgage.

Given the size of the default, that its recently satisfied, and the fact that you are talking about a 10% or less deposit, you have no chance and will need to wait until it comes off your credit file.

edinburgher

Given the size of the default, that its recently satisfied, and the fact that you are talking about a 10% or less deposit, you have no chance and will need to wait until it comes off your credit file.

Well, £15k deposit on a £135k house is 11.11% deposit by my calculations, but I thank you for the advice

Funkygibbon

I have just had a default removed from my credit reports after 5 1/2 years so you might be closer to it being removed than you think!