Mortgages and Credit Ratings

MrsHughes88

My husband and I both have pretty bad credit ratings as we are currently on a debt repayment plan with PayPlan.

I checked my credit rating on CreditExpert last week and it was fair rather than bad which I was suprised at, I can't remember the score though.

My father recently passed away and left us some money so we are looking at putting down a deposit on a house but we are unsure if we will get one with having pretty bad credit ratings.

Would it be best to pay off the debt and save the rest for a mortgage later down the line or pay off the debt and try and get a mortgage now with a bad credit rating still?

Thanks in advance x

ACG

Yes.

You need to clear the payment plan (ask if they will accept a reduced amount if you pay it in one lump sum...you never know). Then get saving towards the mortgage. In the mean time try to get a credit card or something to improve your credit and basically show you can be responsible with credit otherwise you will find it difficult, my gf is in a similar position.

You will probably need close to a 20% deposit really.

MrsHughes88

I never thought of asking them to ask a reduced amount. I think I will get hubby to sort that out tonight.

We have read about using credit cards to boost our credit rating back up once we have cleared the debt so we will definately be doing that.

Thanks for you advice x

ACG

No problem, dont apply for the credit card until that has been paid off and your credit file has been updated it will increase your chances of being accepted.

MrsHughes88

Just spoke to my husband and he said if we do that it doesn't show as paid on our credit files it shows as settled which still gives you a bad credit rating or something? x

Thrugelmir

Your credit file will continue to show the default for 6 years from the date of final settlement.

Worth well approaching your creditors for an early settlement figure(s).