Refused mortgage for bad credit, anything I can do?

Ojivar

Hi all

I've been visiting this site for a long time but the time has come to post my own question!

My situation is this:

7 years ago I went bankrupt.

6 Years ago the bankruptcy was discharged.

5 Years ago I was able to open my own bank account, get a debit card and a cheque book and was even offered a credit card but I declined!

2 Years ago my wife and I bought our first house, we were excepted for a mortgage with no problems or questions whatsoever by the Halifax.

This year work has offered me a chance to move from way down south to oop north, meaning I can get a better house for my money.

In Feb we had an offer on our current house and are due to complete next month.

We went up to Yorkshire, found the house we wanted and put an offer in, this was accepted and so we started the ball rolling.

First of all I went back to the Halifax, they refused me due to my credit rating. Most confused as I already have a mortgage with them and my credit has only gotten better since they gave it to me.

I checked my Experian credit and discovered £1,400 of default payments still showing from when I went Bankrupt, NOTHING else is on there so nothing new has arised since getting a mortgage 2 years ago.

Meanwhile the broker at the estate agent selling the house offered to do a mortgage search for me and I emailed him all my details to make things quicker then tried to get hold of him on the phone to explain the situation. By the time I did that he had already put my details forward to a lender and they rejected me as well.

He is going to try and see if there is anything he can do but they are putting the house back on the market in the meantime (understandably).

Is there anything I can do?

The default payment happened on 05/05/2006, does this mean it will automatically drop off on 05/05/2012? Or can it linger a bit longer?

It's annoying because we really want this house and it looks like when the default should drop off my credit history in the next 6 weeks, as we all know it takes at least that long for a house sale to go through but of course no buyer is going to proceed on the assumption my credit will be ok for a mortgage in six weeks time!

Sorry for the long post but wanted to get it all in there and throw it to you guys to see what you suggest.

Thank for reading!

EDIT: Incidently the offer on the house is £84,000, we will be putting in a 25% deposit and only need to borrow £63,000, is there a lender that would be more lenient seeing as how we have a good deposit?

Dave_Ham

I am very surprised by the Halifax to be honest. 2 years good track record and then they fail you does not make sense...?

Have you both (assuming joint mortgage) checked both your Experian and Equifax files to check nothing has crept on new without you knowing? Sounds silly but important

Aside from this, the only way you will get this through is if you can find a smaller bank or building society who will manually underwrite your case. You will need copies of everything and so long as your financial management has been good you may get half a chance.

Obviously I do not know enough to name drop lenders on here, although sometimes if you are moving into an area the smaller, geographic based ones may be able to help.

In answer to your default question, it should drop off as stated although you must check this on Experian and Equifax

Did you pass the AIP at Halifax and did you use broker or branch direct?

Too late now also, but you have declared your hand a bit early to the Estate Agent and was a bad move. Not only has the decline added to your file, you will need some decent proof to convince them to hold it for you...

Ojivar

Dave_Ham wrote: »

Did you pass the AIP at Halifax and did you use broker or branch direct?

Yes with no problem, our monthly payments would have been under £300 as well so most lenders seem to be more then happy with that.

I went direct as we are already with them, is it better to go through a broker?

Dave_Ham

To be honest with Halifax it is the same as the same system is used. Well currently as under review with Lloyds Banking Group

A broker would typically spot a glaring issue quicker than the branch staff, although branch staff would have better contact with underwriteres/decision makers in most instances.

It plainly does not add up. Halifax have not tightened their criteria hugely.

Sorry by AIP, I mean did you pass the Agreement In Principle credit check to fail the full application or was it declined within 10 minutes.

I ask to try and determine where it fell down to try and attach logic

Ojivar

Ah right, no they discovered the credit errors in the first section so I guess we never did get an AIP.

One thing that is on my mind is if it is possible that the default payments weren't on my credit report 2 years ago for some reason?

It says the status was last updated 06/11/11 which doesn't neccesarily mean anything but it just seems really odd that I could be refused twice (plus I was refused a £100 overdraft on my bank account in Dec last year I think it was) due to my credit rating which had never been a problem in the previous few years.

Wouldn't defaults be put on as soon as they happen or is it possible that HSBC added it last year for some reason?

Dave_Ham

Even stranger, it should be apparent when applied and when put onto your credit score.

If you had moved a few times they may not have linked the addresses for a while. Still, very strange...

Ojivar

Here's what the Experian report shows me:

Account type: Bank

Started: 05/03/1993

Current Balance: £1,422

File updated: 06/11/2011

Default Balance: £1,437

Defaulted On: 05/05/2006

Status history:
Last updated: 06/11/2011
8
Note:
A defaulted account is removed from your report after six years whether or not you have paid the debt in
full. If you have paid some of the debt off, the balance should show how much you still owe.


Don't know if that helps in anyway. It looks quite likely I am going to have to give up on this house and try again after the 5th May.

MoneySaverLog

That default will drop off Experian on the 6/05/2012 a week later on Equifax if you're lucky and may be ahead of time with Call Credit speaking from experience just because the credit file is clear on those dates does not mean the banks data has been updated or is run real time when you apply. I got mine cleared end of last week yet got declined for a credit card at Lloyds TSB despite having a excellent internal credit score, someone has suggested that they do monthly updates though the time of month is not clear but it's sometime around the 16th-20th as told to reapply then.

Thrugelmir

Ojivar wrote: »

Ah right, no they discovered the credit errors in the first section so I guess we never did get an AIP.

The lender may not detect the default on the first soft credit check. Depends on who they use.

A default with a balance outstanding doesn't look good. Now that lenders have tightened up underwriting criteria. Would have been worth paying off the default if there was more time to run. As it stands lenders will be negative towards you.

Ojivar

Just had a more thorough read through of my Experian report and I can see in the financial links section the date of the link relating to the defaulted payments is 11/04/2010, 7 months after getting my last mortgage!

This explains why all of a sudden it became a problem, I guess somewhere around this point they linked all my old addresses together! :mad:

Musicjazz

Bump...

Hi Ojivar. Let us know how you get on...

Hope you get your mortgage!