Rebuilding good credit after IVA

Claralou_2

Hello,

I have recently completed my IVA and my next step is saving up a deposit to buy my own place so I wanted to know the best ways to rebuild a good credit report to help increase my chances of getting a mortgage in the future please?

I have read a few post which have confused me slightly with regards to credit cards...

One said having a credit card and managing it well by meeting all the monthly repayments would look good on your credit report. Then another conflicting view said that having too much credit available in the form of credit cards was a bad thing and would put mortgage lenders off so to get rid of the cards. Which of these views is most likely to be true?!

I currently have 2 credit cards, which I could easily live without but is it best to have one just in case? If so do I get rid of the one with the larger credit limit? Or the one I've had longest/shortest? I've never missed a payment on either.

I have also read the various posts on how difficult it is to get a mortgage after an IVA, what would be the best way to approach this? How much time should I leave before trying to apply? What kind of percentage for a deposit should I save before applying? Will applying for mortgages effect my credit report making matters worse if they aren't approved?

So many questions!! Any advice or information would be most welcome. Many thanks x

Foxy-Stoat_3

Use your credit cards wisely - no 60inch LED tv's!! just food and fuel.

You need to spend every month on them and make a payment to get a "green box"....pay the full balance off will incur no interest, if you don't use them and don't make a payment you get a "grey box" (experian).

Lenders want to see you using credit and making payments. If you have a £10,000 credit limit and only use £500 a month, then reduce it. No point having that much credit available as you won't want to have £10k on a 30% credit card anyway.

Save up at least 20% cash deposit before thinking about looking at a rightmove or similar. Legal fees will be around £1500, broker/mortgage fees maybe £500-£1500, survey fees will be £250-£450 - so if you have 22-25% then you will be on the right track. Avoid assuming you can put the mortgage fees on your mortgage as every £1 you borrow you will pay back double over 25 years and this reduces your LTV %

Use a whole of market broker and ask if they have placed an ex-iva person in the last 6 months - expect to pay high fees.

Stay away from the High Street as the computer says NO !

Apply to 4 banks on the High Street and get declined will effect your score.

Leave it 12 months since your IVA was completed.

Well done and good luck.

Claralou_2

Great! Thank you for your advice. It has been very useful.

Foxy-Stoat_3

No worries, you will get there.

I managed to get a "high street" mortgage from a broker at lowish fees 6 months after my IVA finished, but that was a couple of years ago now and things change fast in the mortgage market.

rabbit_burrow

When I applied for a mortgage they asked what (if any) credit card balances/loans/other financial commitments I had.

AFAIK they only take the actual balances into consideration.