FTB - Bad credit

TCTopcat_2

Hi

After just buying my first house my boyfriends sister now thinks it would be an idea for her to do the same.

Unfortunately she has bad credit and i dont know if this would effect her chances of being able to borrow. In 2009 she had racked up various defaults - ones for as small as £28. She was going through a rough time as both her parents had passed away within a short period of time. She was only a student at time and none of us were aware she was going through such bad financial difficulty. I guess she was very stupid and was borrowing money she could not afford to repay

In the end she has advised us she has 8 defaults, mainly for mobile phones, a pay day loan and an overdraft & credit card with her bank. Shes since graduated from uni and is currently earning 23k per year..

With no place of her own and no family to support h
er she would like to buy a house. She has deposit of 10% she has told us. Her credit conduct since 2009 has been good, i have seen her equifax and she has had mobile phone contract & 1 credit card since which now has a limit of £3000 and a balance of £0 - Its repaid in full each month since the last year and she looks to be on her feet financially and now realises how things are beginning to effect her...

What are her chances of being able to borrow? Do you think a lender will borrow her since he has demonstrated she can now handle credit? Will they take into consideration her past as an explanation of the debt?

PS - Total debt is around £2800 . None of which is settled, i have adv her to agree a settlement with each company.. is this best place to start?

DevCoder

no lender (well no high street one) will touch her until the debts are settled (and then it might take some time).

ACG

Yes, in my opinion it needs to be showing as settled/satisfied on her report.

Once it has been satisfied for 3-6 months she will stand a much better chance of getting a mortgage.
The defaults seem to be around 3 years old which is always a good thing. However with a 10% deposit i think she might struggle. I think really she is looking at a 15-20% deposit.

TCTopcat_2

Thanks for your reply, shes advised she could raise another 5% before she would considering applying. I will adv her to get cash settlements with the collection companys for all defaults and get them settled and atleast that is a starting point.

I think she will need to wait until 6years until they are off then she could consider, but thought i would ask the Q