Default Balances on Credit Report

DanSpooner

Hi There,

I'm new to this forum and to be honest I'm quite inexperienced when it comes to my credit status etc.

I've placed this query in the mortgage section because me and my girlfriend are looking to get a flat between us rather than rent.

I've taken a look at my credit report and its very poor (504 rating to be exact) and I was looking at how to improve it. The main issue is that I have a defaulted debt on my file from LOWELL PORTFOLIO I LTD. This is an old debt from Three mobile in which I passed on the contract to a family member (unofficially) who didnt pay, so yes it is my fault that there is a balance. I want to clear this up and was wondering if there is a way of me getting this paid off and removed from my report? I also wanted a few quick tips to get this score improved asap as I am saving for a mortgage under the Government backed "First Steps" scheme which helps first time buyers get on the market. I would like to view some properties within the next 4-5 months but I guess with a low credit score a mortgage would be a no-no?

Any help would be appreciated. I'm 23 and fairly inexperienced when it comes to all this so sorry if I come across naive at any point.

kingstreet

A default remains on your credit file for upto 6 years. If correctly registered, which it sounds like it was, you won't get it removed.

Mortgage chances depend on loan to value, ie how much deposit you are putting down v purchase price.

If you are paying for this "credit score" stop now. Lenders calculate their own scores t=from the data you give them, plus a look at your credit file. A CRA score only becomes important when it starts to lend money.

A well-managed credit card, used for everyday purchases and paid-off monthly so you pay no interest will help give lenders a positive impression of you after a few months.

DanSpooner

Hi Kingstreet,

Thank you for getting back to me.

I'll apply for a credit card to improve it over all. Would it be beneficial to pay the defaulted balance or will this have no effect? The reason is I guess lenders would case more about the fact you defaulted in the first place rather than if you paid it off?

Thanks Again.

kingstreet

Settling a default is never going to harm, and it may help, so do it if you can.

If the amount you need to repay comes out of your deposit and takes you over a loan to value border (ie you would need 85%, but repaying the debt takes you over that) consider talking it over with a broker first.