Partners credit file

mitcho_uk

My partner had a few financial problems about a year or two ago, i negotiated reduced payments with her creditors, which we used for a couple of months before settling the balances. However these reduced payment arrangements have been registered on her credit file. She has no defaults but has a few late payments and now all of her accounts are closed. She is now struggling to get credit or the credit she is offered is at ridicoulous interest rates.

Should she write to the companies involved and ask for this information to be removed from the file?

Should she file a correction notice to say why she had to arrange reduced payments?

She feels that she is being punished for making a few mistakes. She did the right thing by talking to her creditors to prevent the problem escalating.

We except that she wont get the best interest rate but a half decent one would help.

Is it worth going round the banks with her credit file and talking to each establishment?

Does anybody know of any companies that would take her on based on this information.

Does anybody have any ideas as to how to clean up the credit file.


Thanks

Malestrom

Its probably a combination of the fact that she had problems and also that she doesn't currently have any credit. Companies are wary of lending to people who have had problems repaying but they also don't like to lend to those with no other credit either. Its a bit of a catch 22.

To start rebuilding her credit status, apply for a Capital One Visa card, which is guaranteed to anybody no matter what their credit rating. If they feel she is a high risk, then they will only offer a limit of £200 and may ask for a deposit of the same amount although this is rare in my experience. Use this card regularly but most importantly, pay it off every month in full. After six months or so, she could try applying for a loan or another credit card. The fact that she has a Capital One card and has a good history of paying it, will help her application. Obviously, it wouldn't be wise to ask for a £10,000 loan after the six months, you need to be sensible.

In the meantime, get copies of her credit report from Experian AND Equifax and go through them, if you haven't done so already. If you feel something is amiss, contact the original creditor and ask them about it. Putting corrections on your credit reports doesn't always help as most credit searches are automated and these won't be taken into account. She needs to ensure that all previous accounts are showing as closed and satisfied.

mitcho_uk

Thanks very much, Is it the classic visa card that she will want

comeonthetic

Malestrom,

Does it matter how much you spend on a card?

For example if you spent £5 every month on it and pay it off each month compared to spending £50 each month and clearing it off? Is there a difference in the way your credit score would reflect this??

Tic

JasonW_2

It doesnt mean she wont ever get decent interest rates, but as you say, she is still classed as a risk. Unfortunately, the lenders dont care about the reasons for the missed payments, and adding a notice of correction explaining why would make her appear desperate for credit, and is only her word on the situation. They would rather I guess, have no notice of correction, and decide based on the info in the credit report and their own scoring system.

Assuming she has missed a number of payments, 'a year or two ago' is still not that long ago as far as lenders are concerned, and they dont want to offer low APRs as there is always the risk of not getting their money back - basically the APR she is being offered is her rate-for-risk.

She would be better of getting her credit reports and see exactly what they say. Make sure all old accounts are marked as closed/settled, and dispute any mistakes she finds.

I dont think going round banks would have any benefit, cos the managers in banks have little or no discretion these days like they used to, and they will base their decision mostly on her file and their score, plus it would add more searches to her report, meaning the 3rd, 4th, 5th.... banks she goes to says no in a bigger way!

The only real way to clean up a credit file apart from checking for mistakes, is simply time and patience. Dont apply for credit unless you really have to. Close all cards and accounts that she doesnt need, and confirm they have been closed. Maybe look at other ways to save money to reduce other debts. Stay in more often, spend less on pointless things like makeup, clothes, shoes etc!

mitcho_uk

Thanks all, would it be the capital one classic visa card she requires.

Malestrom

Yes, its the Classic card.

Comeonthetic, now thats a good question. As far as I'm aware, no the amount is not important. Its the activity on the account and the fact that its being maintained properly which is recorded, i.e. paid regularly and on time. You don't have to pay it in full every month per se, its just that this account has a high APR and this is the money saving site, so I would get shot for not telling you to do so!

mitcho_uk

do you have to actually use it. Say spend £50 on it every month then pay it off or is just having a credit card good enough to increase the credit rating. How long does it take to have any effect on the rating.

Apologies for so many questions

comeonthetic

Thanks Malestrom,

Don't worry I have no intention of applying for any type of CC in the near future.
I'm just thinking about all the times in the past when I have used my CC and had every intention of paying the money back soon after, only for something else to jump in and swallow the money meaning only the min was paid. Believe me, this happening several times can add up to a hefty sum.
Therefor it may be wiser for some people trying to improve their credit record to spend very little and give themselves the guarantee that they will be able to pay it off. For instance instead of filling the tank with petrol using the card (like I always did) just put in a fivers worth.

Malestrom

mitcho_uk, general advice here is that you should wait 6 months after being refused credit before applying again, however, you can apply for the Capital One card now because its guaranteed. Just having the card will improve your chances but having a card that is active will look better when other lenders do a search as it will show that you are able to repay your debt.

Malestrom

comeonthetic wrote:

Thanks Malestrom,

Don't worry I have no intention of applying for any type of CC in the near future.
I'm just thinking about all the times in the past when I have used my CC and had every intention of paying the money back soon after, only for something else to jump in and swallow the money meaning only the min was paid. Believe me, this happening several times can add up to a hefty sum.
Therefor it may be wiser for some people trying to improve their credit record to spend very little and give themselves the guarantee that they will be able to pay it off. For instance instead of filling the tank with petrol using the card (like I always did) just put in a fivers worth.

Generally, if you have any adverse entries in your credit record, you will only get offered a minimum amount on this card anyway. I was given a £200 limit although they didn't require a deposit, which was a surprise. I applied for this card to be able to purchase on the internet when sites don't accept Solo. Also, it gives me added security in that situation. Whenever I use it, I log straight into my bank account and immediately make a payment to cover it, which is my way of making sure I dont spend the money on something else. I never wait for the bill to arrive. I only recommend this card because anyone can get it, no matter what their history. As a credit card, its not a particularly good one.

On re-reading what you wrote, I realise that i've descended into 'Waffle-Land' (tm) and yes, I heartily agree with what you say. I've also 'been there, done that' and you do have to be careful.