Almost Debt Free > Dealing with poor credit

TheWrights

Hi all,

First time posting on this site but have used it as a information resource for a long time now.

As of this time last year me and my partner decided to finally start taking our finances seriously. We are both 24 years old but have lived together in a few houses for almost 6 years. We have moved around a lot due to my industry and moving where the money is. As a result of this and not really taking our money seriously we has accumulated a lot of petty debt. Like not providing monthly metre reading to our utility companies and using way over their monthly estimate. Anyway, we face up to it all around 12 months a go and I can confidently say that as of this coming November we will be totally in the green. Our overall debt was around £6000.00 so we have been paying large monthly repayments to get it all cleared.

We really want to own a home as we are and always have been renting. The house we are currently in is absolutely our perfect home. We deal direct with the landlord and have an agreement to rent until we have the means to buy. Basically as long as it takes us to get a good deposit together. As we're going I estimate this to be around 18 months until we have a 20% deposit. The landlord has promised to take the rent we've paid into consideration when valuing the house for us to buy and as it stands it is well and truly on the cards for us to buy the house.

But, as a result of the debt we have almost cleared our credit rating is less than desirable. I worry that even with the 20% deposit and a clean slate for 18 months it still won't be enough to clear us for a mortgage. We have no CCJ's but as the credit reports go back 6 years we have a numerous defaults showing from the past.

Can anybody shed any light on how concerned I should be / actions to take to avoid disappointment etc.

Tixy

Hi

It certainly does make it harder to get a mortgage with defaults on your credit file. But I would suggest that you start trying to build up a positive rating showing you can handle credit responsbily now by reading this article - http://www.moneysavingexpert.com/loans/credit-rating-credit-score#improve
It basically suggests you get subprime credit (either poor interest cards or catalogues etc) and use them each month but pay off in full each month so you don't pay interest. Then after 6-9 months of this try to go for some prime credit that will look better on your file.

How many defaults will still be on your credit files in 18months? Have you checked to ensure all creditors have recorded them as satisfied defaults now?

Well done on clearing your debts and good luck.