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Mortgage application with historic 'Arrangement to Pay'
Something_Witty
Posts: 18 Forumite
Other half and I are planning on buying our first property in 2015, when we will have a 20% deposit. Looking at houses around the 150-160k price mark with combined salaries of approx. 45k.
Other half has a clean credit history, no debt except a student loan and one credit card paid in full every month. I on the other hand had a few thousand pounds of debt until last year, when I finally managed to clear balances of one loan and a credit card. Now I only have approx. £700 outstanding on a Barclaycard under an 'arrangement to pay'. No other late payments or defaults. We are linked financially via a joint account with overdraft.
I am now in the position to clear this Barclaycard balance completely, and will be debt free, except for a student loan. As I understand it, I have 2 options:
1) Pay the Barclaycard balance, settle and close the account. I understand this will mean the AP markers will stay on my credit file for another 6 years. I would then apply for a sub-prime credit card (to improve chances of acceptance), and pay off in full every month to try to improve credit history.
2) Speak to Barclaycard and request to come out of the arrangement to pay. Barclaycard have advised that I need to make 2 further payments to come out of the arrangement, at which point I can request a new card. I would then pay off the balance so the amount owing is zero, then spend a little each month and pay in full every month. I understand that if I keep the account open and active the AP markers will drop off in 3 years rather than 6.
Which option would be most positive for my credit file/rating, and therefore a potential mortgage application in 2015? I have heard that active accounts are weighed more heavily in credit scoring but I don't like the sound of AP markers hanging around for a further 6 years.
Any advice appreciated - thanks
Other half has a clean credit history, no debt except a student loan and one credit card paid in full every month. I on the other hand had a few thousand pounds of debt until last year, when I finally managed to clear balances of one loan and a credit card. Now I only have approx. £700 outstanding on a Barclaycard under an 'arrangement to pay'. No other late payments or defaults. We are linked financially via a joint account with overdraft.
I am now in the position to clear this Barclaycard balance completely, and will be debt free, except for a student loan. As I understand it, I have 2 options:
1) Pay the Barclaycard balance, settle and close the account. I understand this will mean the AP markers will stay on my credit file for another 6 years. I would then apply for a sub-prime credit card (to improve chances of acceptance), and pay off in full every month to try to improve credit history.
2) Speak to Barclaycard and request to come out of the arrangement to pay. Barclaycard have advised that I need to make 2 further payments to come out of the arrangement, at which point I can request a new card. I would then pay off the balance so the amount owing is zero, then spend a little each month and pay in full every month. I understand that if I keep the account open and active the AP markers will drop off in 3 years rather than 6.
Which option would be most positive for my credit file/rating, and therefore a potential mortgage application in 2015? I have heard that active accounts are weighed more heavily in credit scoring but I don't like the sound of AP markers hanging around for a further 6 years.
Any advice appreciated - thanks
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