Red alerts with two loans! Need to be back in the green!! Please help

natandash

Hi

My name's Ash. Me and my girlfriend Nat have recently found out Nat's pregnant so we desperately want to get a mortgage and buy a house together. We both have good well paying jobs (im in the forces and nats a supervisor). However, there is one problem...OUR CREDIT RATINGS

My problem...Aprox two years ago i had two loans. One with lloyds £2500 and one with HSBC £500. I lost my job at the time and through going through all the correct channels me and my creditors agreed i could only afford to pay them both a token payment of £1 each. After a certain amount of months (i would have to check but i think aprox 6 months) the debts were transfered to a debt collection agency. I continued to pay these people £1 a month too. Everything was fine till they sent me a letter saying that they would like to review my financial situation. I do now have a job. I know that i should be paying them more but i have other bills and hardly any disposable income. I am willing to ring them up and make them another offer. So, my question really is two fold....

. If i ring them up will they make me pay them what i was before because i have a job now? (which i wouldn't be able to afford)

. And two, is it possible for me to make them an offer which if i were to keep up the payments each month would put me back in the green so to speak with the credit reference agencies and give me good credit again? So i can apply for a mortgage !!

I REALLY would appreciate any feed back here as i seem to have got my self into quite a pickle, feeling very bogged down with it now with no way out!!

P.S my girlfriends situation is pretty much the same but instead of 2 loans its one but its for £5000...she is currently paying £5 a month (she has now been behind for nearly 4 months).

Thanks again for anyone who takes the time to read and comment on my thread its a really worrying time and feel like i really want to provide for my soon to be family, so need to get my credit back to good!!

dgtazzman

. If i ring them up will they make me pay them what i was before because i have a job now? (which i wouldn't be able to afford)They can only make you pay what you can currently afford, in theory, of course they'll try for more. They will probably require an overview of your income and expenses (SOA).

. And two, is it possible for me to make them an offer which if i were to keep up the payments each month would put me back in the green so to speak with the credit reference agencies and give me good credit again? So i can apply for a mortgage !!No magic solution I'm afraid, your credit history is going to show the defaults on the loans for 6 years from the original default date, even if you do now start paying the debts off. If you do start making regular payments, it will look a little better, but probably not to such a degree that you will be able to get a mainstream mortgage.

natandash

Hi dgtazzman

Thanks for your information really helpful.

So if the damage is done so to speak should i continue to pay them a token payment? Also, if i have not paid the full amount off in the six years that this is on my record for, will it still be taken off once the six years is up? I realise i would still have an outstanding debt (which i would continue to pay) but would i then have a good credit rating again?

Thanks Ash

dgtazzman

The default will drop off after 6 years, regardless if it's paid or not. However, if you don't keep those collection agencies happy, they might take you to court and have a CCJ issued against you, which would add another 6 years from the date of the judgement.

natandash

Got it !! So as long as i keep them happy there should be no CCJ's?...Also you know what you said about if you start paying the debts off properly it would look better but not enough to get a mortgage...what if i found away to pay them both off completely?? would that look good enough??

matttye

natandash wrote: »

Got it !! So as long as i keep them happy there should be no CCJ's?...Also you know what you said about if you start paying the debts off properly it would look better but not enough to get a mortgage...what if i found away to pay them both off completely?? would that look good enough??

Nope.

It's your ability to keep up with repayments that they're concerned with. With a default on your credit report they will be wary about your ability to manage the mortgage properly.

As I said in your other thread, you can get a 'sub prime' mortgage but you'll pay a much higher rate (because of the higher risk you are deemed to be) than others.

natandash

Would it change anything if lets say you got a pay rise at work and you could prove you had dispensable income to pay the mortgage off with? (As well as keeping up with the agreements with the creditors??)

matttye

natandash wrote: »

Would it change anything if lets say you got a pay rise at work and you could prove you had dispensable income to pay the mortgage off with? (As well as keeping up with the agreements with the creditors??)

It will all help, but the chances of getting a decent mortgage with defaults on your credit files is slim to none.

I'm debt free, with savings, and two 4 1/2 year old defaults, and I wouldn't dream of applying for a mortgage for the next year and a half.

natandash

mattye - I cant thank you enough soo helpful! I realise im screwed !! However i need to ask about my girlfriend because at the moment im keeping my fingers crossed that there is a chance to save her credit file....she has been making all of her payments ok then she ran out of savings(don't ask!!)...anyway she then struggled to make the £360 odd repayments she needed to make! She did what i did and offered them a token payment of £5 a month...shes been doing this for either 3 or 4 months now. However i think that between us we could come up with a better payment. so......

.Is she going to have bad credit for 6 years now because shes altered her payment for a few months? (the case has not gone to a debt collection agency yet).

. If we can strike a deal with them lets say for argument sake for £200 a month and they accept...does that still count as a default? Or if she keeps to that deal for lets say a year will she have good credit?....

My thinking is that if she has good credit she can get the mortgage ....what do you think?

matttye

You both need to check your credit files with all three agencies (Equifax, Experian and Noddle) and find out exactly what has been reported to your files. Anything we say until then will be pure speculation.

If your girlfriend has good credit then she can get the mortgage, sure, but if you have any joint accounts your credit will affect her too.

natandash

Will the 3-4 months of changing her agreement make a dent in her good credit though?