arrangement to pay - mortgage application

AliceBanned

I have spoken to a mortgage broker as I am trying to get an idea of when I will be able to buy - I hope to buy a flat next year. I have no bad credit history in the past 7 years apart from an Arrangement to Pay on a credit card. I had some financial problems in 2004-6 and was repaying a balance of a credit card £1500 on an Arrangement to Pay, settled in 2009 and account closed then. I did not default or have a CCJ (I did on something else but this dropped off my file some time ago and I have been rebuilding my credit ever since).

I have now found that this will stay on my file until 2016. As it is the only blemish on my file and I have kept other accounts well, and by the time I apply for a mortgage will have no debt and hope to be asking for 75-80% LTV, is the Arrangement to Pay enough to cause problems? I know lending criteria changes etc. I am now doing two jobs to try and get the money together. I could rent for ever but ideally would prefer not to. 2016 seems a long way off. . I understand lenders being picky but the account was managed and payments made since Feb 2007, and so were all my other accounts, since before then. In light of a big salary increase since then and completely different situation I wonder whether it is going to get in my way.

The_J

How does it show on the credit report then? Missed payments?

I'd aim for 75% but would cautiously say you should be OK.

AliceBanned

The_J wrote: »

How does it show on the credit report then? Missed payments?

I'd aim for 75% but would cautiously say you should be OK.

Hi

It shows as AR Arrangement to pay. It means I set up an arrangement with the lender but did not miss payments or default. From Feb 2007-2009 it shows as OK on all the payments - I think during the AR phase they froze the interest but after this I made payments as usual. So it shows as AR and then OK since 2007. But the AR part is part of the file so according to Checkmyfile this won't be removed until 6 years after the account closed, ie 2016! If I had defaulted at the time it would have been removed earlier, 2013!!

AliceBanned

And thanks I will try and work towards 75% but it is a tricky one as some of this will be a discount on a Right to Acquire (similar to Right to Buy) purchase and some will be my own deposit.

Thanks.

MagicCats

I'm pretty sure most Credit Reference Files only show the last six years conduct so assuming all you have is an arrangement to pay marker instead of a green tick in the box then by the time you apply it will be gone.

Have you got copies of your credit files?

The_J

Well I think you should be fine. Arrangement to pay isn't necessarily a major problem, you have recognised there would be a problem, made efforts to pay the debt and sorted it out - all of these are good things to creditors. And you can feel good about yourself that you don't owe anyone anything having paid your debts.

AliceBanned

MagicCats wrote: »

I'm pretty sure most Credit Reference Files only show the last six years conduct so assuming all you have is an arrangement to pay marker instead of a green tick in the box then by the time you apply it will be gone.

Have you got copies of your credit files?

Thanks. The independent mortgage broker I spoke to said that at the moment even late payments are being used as reasons not to lend! Hopefully this will change and maybe it is just a tough time still to try. The AR marker will still be there until 2016 so I will just have to do everything I can to improve everything else. Thanks.

AliceBanned

ps yes I keep copies as I am registered with checkmyfile.com so i can keep an eye on it - hopefully improving!:j

AliceBanned

The_J wrote: »

Well I think you should be fine. Arrangement to pay isn't necessarily a major problem, you have recognised there would be a problem, made efforts to pay the debt and sorted it out - all of these are good things to creditors. And you can feel good about yourself that you don't owe anyone anything having paid your debts.

That's what I thought, it is nothing compared to a default but I have read somewhere that it is still quite bad. Seems a bit harsh but that's the way lenders are at the moment. :mad:

MagicCats

AliceBanned wrote: »

Thanks. The independent mortgage broker I spoke to said that at the moment even late payments are being used as reasons not to lend! Hopefully this will change and maybe it is just a tough time still to try. The AR marker will still be there until 2016 so I will just have to do everything I can to improve everything else. Thanks.

Late payments etc will be a reason not to lend. However I'm not convinced the marker will show until 2016. Settled or default accounts drop off your file after six years, and I'm sure that the payment history only shows the last six years so in theory if you have an 'AP' in a monthly payment box instead of a tick it will disappear at the six year point.

Where exactly on your file does it show arrangement to pay? I have a copy of my file from Check My File so can look at it and see where it could be recorded.

Thrugelmir

Arrangement to pay is a default.

Default is technically and legally the non payment of an account to contractual terms. Has nothing to do with rescheduling repayments and settling the debt.

Hence why it remains on your credit record for 6 years post settlement.

The purpose of the flag is to give a warning to other providers of credit.