Credit Rating help (and budgeting)

wanting_an_easy_life

OK, I need some help. I seem to be on a spiral.

Long post ahead!

Firstly, I've always been awful with money. I see credit as being very easy to come by and as I earn an acceptable income (40% tax bracket) in a very average area (3 bed houses are ~£170k), rather welcoming.

The problem is, I was married to someone who saw not only credit as a luxury, but as income. When I split up a few years ago, she alone had some £20k on credit cards (I believe she has since got a DMP and cannot access credit any more). We also had a lot of joint credit. We had a house which, when we split, was remortgaged and all the money we made out of it got swallowed up.

I on the other hand, cleared my debt and set out on my new life. Unfortunately, quite quickly, I made some costly mistakes (I won't go into them, but they're not illegal or immoral, just plain stupid).

So where am I at now? Remarried and renting (now in my 7th year).

Well, I have a loan for £10k, about 2 years in, 3 years to go. I also have ~£12k spread on 2 cards. Around half is at 0% for 18 months, the other half is at around 5% for the lifetime of the balance. Unfortunately, stoozing (as I didn't realise) hurts your credit rating. I had a letter from a card which I have around £100 on (I was planning to pay it off once I got the final bill). This card has a £15k limit and they wrote to say something in my credit rating means they have to put up the APR to 30%! Needless to say I paid it off there and then and cancelled the card.

So clearly my credit is absolutely borked.

So, here's where we are at. I need to tidy my credit rating up - not for any other reason than I'm absolutely sick of being a tenant.

Not because I see it as being wasted money - indeed the mortgage on the house I'm currently living in would be at least 50% more than I pay, if not more.

No, I'm absolutely sick of being treated like a scumbag by LAs. Ridiculous fees, unfair rules, deposit withholding for the most stupid reasons.

The worst thing of all about privately renting is that you have none of the rights of social housing - unable to change utility suppliers, unable to put up pictures, unable to decorate or in the last 2 houses I've been in, I've not even got a proper shower!

My wife has some small debt (small car loan and student loan) but probably earns half of my salary.

Can I point out - I have absolutely no adverse credit. No missed payments. No overdraft.

So what have I done to alleviate any of this?

Well firstly, I have learned to live off my means. From March, I should be able to save at least £500 a month. I can honestly say, I haven't put a single penny on a credit card since June last year. I have no intention of doing so either.

I have got rid of 2 credit cards. In my wallet currently, I have 2 cards (as above). Actually, that's not true. They aren't in my wallet.

And before anyone says "Reduce your outgoings", I can honestly say that I can't. If I was to put an incomings/outgoings as they do in the bankruptcy forum, most of you would call me a liar for the amount we spend on shopping for instance (around £300 a month for a family of 4). We go out a few times a month to the cinema (subscription) and honestly? Around 4 times a year for other things. Our holidays are sun scummers (£10.50) and so on.

I'm happy to set out my outgoings if you can see anything in it.....

happy_bunny_2

wow, that is a long post.

Don't assume you have something bad on your credit report as they put your rate up, I would check Sometimes they just think people are crazy enough to accept it.

So, check your credit report first.

do you have any joint accounts with OH, as that won't help if there are still defaults etc from DMP

Naf

Just find somewhere nice to rent, with a good LL, and don't deal with LAs ever again. Simple.

As to your credit: the stoozing only hurts your credit when they notice that's what you're doing and so they're making no money out of you.
Have you applied for a mortgage, or do you still need to save towards a deposit? If you still need to save, just continue as you are (possibly minus the stoozing; get one decent credit card - perhaps a cash-back one - to use a little and pay in full every month) until you have a decent deposit behind you; then go ahead and apply. If you are knocked back, then might be the time to wonder why; but if, as you say, you have nothing adverse stuck on your file; and no joint accounts remaining with the ex, you ought to be just fine.

wanting_an_easy_life

Thanks for taking the time to read the OP guys. It's really helpful.

I have signed up for the equifax service , although I'm not convinced it shows the whole picture. I am associated with my ex-wife (but strangely, not my current wife who has an almost perfect credit history). I've asked the question about getting her removed - we actually have no joint history on my credit record, so I hope that she can be removed.

One thing I have noticed is that I've got a lot of unused credit. Around £30k. So I'll be having words to get that sorted. I have absolutely no need for credit (clearly, it's nice to have something in case something goes pear shaped, but £30k is a little excessive).

Naf: Not yet. We're moving rentals right now, but have an 18 month plan to save around £20k (that includes selling a couple of small assets and work shares). That will also cover a CC which has a relatively small amount on, but is like a scab that keeps never quite getting paid off.

According to my credit report, I actually do have one missed payment in 2007 and one in 2012 (I take full responsibility - the DD wasn't set up in time for the first payment, the card is now settled in full). So generally, it's not bad. The other missed payment card was settled in January 2008 so should drop off my credit report by next January.

Tixy

You'll likely need to file a notice of disassociation with your ex wife with all 3 credit reference agencies (equifax/experian/callcredit).
Financial associations can stay on your file indefinitely.

You are right it probably doesn't show the whole picture, not all lenders report to all 3 of the agencies. Seeing as you are planning on a mortgage I would check all 3 (not the ongoing service just the £2 one off - or you can get callcredit free from noddle)

If you don't have any joint credit accounts with current wife there will be o financial association created. If you do have joint accounts perhaps they don't report to equifax.

The large unused credit could be enough to trigger the increase in the APR on your other card (equally it could be because of something you will never know or be able to change - internal policy on underused cards etc).

As said - even when the debts are paid off keep at least one card going and use and repay in full each month, to maintain an active credit history (though the loan will also help with that).

I would consider cancelling/reducing some of your credit limits, especially as the cards are paid off.

And of course - no more missed payments at all over the next 18months.

Assuming you plan to buy with current wife its worth her doing a health check on her credit files as well (or at least long before you are looking to apply for a mortgage).

wanting_an_easy_life

Thanks Tixy. I'll do that. I was going to wait a while before I used my free month up with Experian...

She's going to sign up with them too, but I'm not too concerned - although as I said she has some debt, she's very, very good with money - goes without if things are getting tight and so on. Gets offered ridiculously low APRs on cards she's applied for.

We do have a joint account, although it's a very basic one (we originally did it because it was the only one that offered that "special" card that allowed you to book fee-free with Ryanair). It has absolutely no credit facilities. In the new place, we intend to try and use it properly. At the end of the day, there's no point me asking her for more money (I pay 80% of everything) because if we're saving together, I'm just borrowing from Peter to pay Paul.

Petlamb

One (relatively small) thing to pull out - you mentioned you were "unable to change utility suppliers" - this is unlikely to be the case, certainly not legally.

http://www.guardian.co.uk/money/2012/aug/23/tenants-barred-changing-energy-suppliers

Excerpt:
A rental contract is allowed to stipulate that tenants ask a landlord before switching energy supplier, but it cannot refuse permission to switch altogether.
The Office of Fair Trading states: "The tenant should have the choice of supplier, although he may be required to keep the landlord informed of any change and to return the account to the original supplier at the end of the tenancy." It adds that landlord's consent cannot be "unreasonably withheld or delayed".