Trying to sort out finances. . .

andy_P

It is a mortgage related question but there’s a CC part so not sure whether to post here or in the CC section. Please advise if you’d be so kind. Brief synopsis. Wife had major incident that left her remaining profoundly ill after significant recovery period, but still with us thank goodness.

Entered payment agreements with RBS, Barclaycard and Lloyds TSB as we lost her salary and my hours were reduced having two young children and care responsibilities.

Lloyds TSB and Barclaycard kindly stopped interest on the balances and accepted £18 and £12 per month respectively. No default served. RBS however accepted (reluctantly) £97 per month and defaulted the account after six months of paying the agreed payment as it was lower than the minimum required contractually.

Current situation. The kids are now secondary school age and the missus has a care package that has allowed me to pick up my career again. In November I acquired a band 6 NHS post and immediately called Lloyds TSB and asked to come out of the arrangement to pay. There is a balance of £1683 on the said Lloyds TSB Mastercard with a 17.9% APR. Two green zero’s showing now on credit file following AP’s since end of 2007.

£3462.21 balance on RBS CC (I know we were really silly to let the balance approach 8K but hindsight is wonderful!). Been paying £97 per month without interest as account was in payment arrangement then defaulted. Credit file just shows as account defaulted in 2007. RBS not even updating file with payments made though they are sending monthly statements which show the balance decreasing.

£924.44 balance on Barclaycard. Still paying £12 per month on an arrangement to pay with £2.40 interest added each month so £9.60 coming off the balance. Credit file shows AP’s since 2007.
I know I ought to have contacted Barclaycard to come out of the arrangement to pay straight away but with Christmas week being my first ‘decent salary pay day’ for a long time to be honest we enjoyed Christmas and I am dealing with it now.

I have just applied for and acquired a Capital One Visa Card with a ridiculous 34% APR, but I applied for it as it has the option of a 7 month 0% balance transfer (saw the write up on here!). I will definitely not use it for anything other than the balance transfer option. Credit limit of £1000.

May I ask for advice on a couple of things. . .should I transfer the whole Barclaycard balance onto the new Capital One card and close the Barclaycard altogether ensuring the balance is paid off over the 7 months interest free period (the final entry on my credit file would be AP before closing if I do that) then close the Capital One Card or should I transfer a similar amount off the TSB balance? How long should I leave the Barclaycard in the AP as I want to apply for a mortgage in a couple of year’s time (I am having £800 per month transferred from my current a/c into a savings a/c so we will have 20K deposit) and I imagine the more green zero's the better. . .

and. . .Will the defaulted RBS a/c not show on my credit file after April 2013 (six years after the default)? There will still be a balance of 2104.21 outstanding as I will continue to make the £97 per month payment. Where will that be reported credit agency wise?

Sorry to ramble but hopefully you good people will help me to make the right choices.

Thrugelmir

Rather than saving £800 per month. Use some of the money to clear your credit card debts.

As your credit report is going to look pretty awful for a very long time.

Underwriters will very soon spot that you've saved the deposit at the expense of repaying your credit balances. So will interpret this as your personal attitude and responsibility towards money. Remember these lenders are the same ones that you may looking to obtain a mortgage from.

I cannot stress enough how important it is to have a good solid credit track record. Lenders are even now declining business on the basis of a single small default. This is the new norm. Easy credit days are over.

andy_P

Thank you for your reply to my long winded post! If I transfer the Barclaycard balance to the 0% Capital One card (and close the Barclaycard) and pay it off within the 7 months 0% (then close the Capital One card) and pay off TSB over the next 2 to 3 months as opposed to saving but keep it open and spend small and pay off in full each month to produce green zero's on my file will the file be a no-go mortgage wise in a couple of years time due to the number of past AP entries?

If so, may I ask what might be acceptable to a lender in terms of number of months/ years greens required post AP? May I also ask again about the defaulted account situation. I have read that defaulted a/c's 'disappear' from credit files after six years. . .there will still be a balance outstanding. . .is it just a 'settled' account that 'disappears'?