Another Newbie in need of advice please :-)

Gina22

Hi

I am new to this forum business so forgive me if I am doing it wrong!!

Myself and my partner are currently trying to get a mortgage and have just been rejected because of my credit score. The problem seems to be that I have a default on my credit file which was added in 2007, the mortgage company are ok about this as its over 36 months ago. I am currently paying it off monthly with an arranged payment. Unfortunately my credit score (with Equifax) is currently showing as 346. I am looking to repair this and bring the score to a more acceptable level. First thing I am going to do is pay off the default (£2,400) so that my credit report shows a Fully Satisfied Default. I will get all this in writing before I arrange to pay it.

Q 1. I know the default will stay on my file for 6 years, although not sure if its from the date of the default or the date I settle the default? Does anyone know the answer please?

Q2. Will this improve my credit score by paying in full?

Is there anything else that I can do to improve my credit scoring? I know this wont happen overnight but wondered if I could achieve this in say 6 months?

I have a few credit cards which currently have very minimal balances on them. I also have a store card with about £500 on it, never missed a payment, but would it be better for me to pay that off as well to try to improve my scoring?

Anymore suggestions to improve my score would also be greatly appreciated. This is my mission for the next 6 months to get it to a more acceptable level.

I have a credit card which I paid off a couple of years ago and cut the card up, the information is still on my credit report. Should I get this account closed off? I also have a Grattan account which I no longers use and havent for a few years, also showing on my credit report with nothing owing. Again should I close this off too?

Sorry to ask lots of questions in one post and hopefully some kind person can offer some advice.

Thank you
Gina

WeBeBroke

Hi Gina,
I'm sure you'll get better advice than me but I would say yes to closing off any unused credit. They take into account all your available credit - not just the credit you use.
As for the credit scoring, it's a bit of a grey area as I wasn't aware there was a 'score', different lenders have different criteria so an acceptable risk for one company would be unacceptable to another.
As for the questions about improving your rating, fraid I don't know enough about this to give any advice!
Best of luck and if the mortgage lender are OK about your credit file in this age of stricter controls, then that's a definite plus!

WBB

Tixy

Hi

Its 6years from the date of original default.
Paying it off and having it marked as settled will improve your 'score' a bit. But often doesn't make that much difference to any potential lenders when looking at your credit file.

I wouldn't get too hung up about these scores that the credit reference agencies charge you for as they differ with each agency and as people often say its not the credit reference agencies who lend money to you. But you are right to improve your credit file as much as you can.

Does the credit card shows as closed or open but with a nil balance? Do you have any other credit cards that you do currently use? Even if you don't have debts its actually a good idea to have a card that you use and pay off (preferably in full each month) as that shows you are handling credit responsibly. If people don't have any current history its harder for lenders to assess if they are a good risk.

So if you have another card close this one, if you don't then either consider trying to get a new card issued and using this occasionally or close it and open a new one with someone else. If you do keep it open and its a large credit limit you might want to reduce this (a credit limit counts in any affordability calculations a potential lender would do).

The grattan account - close it if its not closed.

annibee

Ive got a default and my oh has debt but we got a mortgage last year.

We put him as 1st app as his slightly better credit rating (I only had one credit acc and that was a default lol and id lived in loads of addresses over a two year period).

The best thing to do is go to an independant mortgage advisor - we found one that contacted some underwriters first so that nothing official went on our credit report as they told him how likely their company would be to lend us the money. I think he really helped us so I can only praise finding a decent mortgage advisor.

Also the more deposit you have the better chance youve got so keep saving

Good luck and hope you get your mortgage soon

dancingfairy

See here for Martins article on credit rating, how it works and how to improve it:
http://www.moneysavingexpert.com/loans/credit-rating-credit-score
Simple things like paying off very small balances and closing accounts, making sure you are on the electoral role etc all help.
df

Gina22

Thank you to everyone who has kindly replied.

I am in the process of paying off all of my outstanding balances on all credit cards and have even closed the accounts of cards that I no longer use in the hope that this will also help.

Have an appointment with my bank manager next week, so fingers crossed he can help. Once the default is paid off and I have it all in writing I think we are a step closer.

Thank you all again.

Gina