How damaging are late payments?

MattLcfc

Me and my Fiancee are getting married in 2014 and will be looking to buy a house in the summer of 2015, so I want to be able to make sure we are in the best position to be able to get a mortgage then.

I have a Default on my account from 2008, which will drop off in May 2014, so I'm not worrying about that. What I am worried about is several late payment to Orange (never any more than 1 month late) from 2010/2011 and a lot of reports from Wonga and Payday Express (always paid on time) from around the same time.

I am in a much better position now, and I closed my account with orange last November when I was given a company phone, so that account is satisfied, but I'm concerned about the effect of the late payments and traces of regular pay day loans. So I just wanted a bit of advice as to how damaging they can be, and anything I can do to better my chance of being accepted for a mortgage?

Many thanks.

Tixy

They can cause problems in obtaining a mortgage. However the older they are the less of an impact they should have.

Some mortgage companies mind more about old pdl than others.

Between now and when you want to apply for a mortgage certainly don't miss any more payments and don't take out any more payday loans.
Also make sure you are on the electoral roll at all times from now until then.

Ideally don't open any new credit accounts in say the 6months before you want to apply for a mortgage.
Presumably you do have some open/active credit accounts on your credit file now?

MattLcfc

I have a Natwest bank account with an overdraft of £600, and a joint account with my partner which has a £100 overdraft. other than that the only active credit account I have is with Virgin Media.

We're in the process of switching from having Gas & Electric on pre paid cards to direct debit, so I'm presuming this will show on my credit file. Other than that there is nothing else. Would it possibly be worth applying for a Low / Interest Free Credit Card to try and build up more of a positive history?

Tixy

The utilities may or may not show, not all utility companies report good repayments to the credit ref agencies (some only report if you miss payments).

A credit card is a good tool for maintaining an active credit history.

With a default on file you probably won't get a low interest card - however if you use it just for credit building you won't need to pay any interest and so the APR doesn't matter.

Ideally you just want to use for say a couple of items each month and then repay in full each statement. Its not the amount of credit you use that matters just that you are handling it responsibly and repaying on time.

MattLcfc

Tixy wrote: »

The utilities may or may not show, not all utility companies report good repayments to the credit ref agencies (some only report if you miss payments).

A credit card is a good tool for maintaining an active credit history.

With a default on file you probably won't get a low interest card - however if you use it just for credit building you won't need to pay any interest and so the APR doesn't matter.

Ideally you just want to use for say a couple of items each month and then repay in full each statement. Its not the amount of credit you use that matters just that you are handling it responsibly and repaying on time.

Many thanks for your reply.

I have a good two years with no late markers now, so I just want to make sure that from now until we are in a position to apply for a mortgage that there's a good period of responsibility and money management, to counter act the earlier years of bad management.

Maybe a CC which would only be used for small purchases, paid off in full at the end of each month would be my best way of doing this. My only fear is being refused and the negative effect that could have.

Tixy

A single application on your credit file now will make very little difference to your file.

If you are declined that isn't reported as such on your file it just shows as an application search.

Because you do have the default at the moment I would try for a subprime card - you could maybe look at the pre-eligibility checker
http://www.moneysavingexpert.com/credit-cards/bad-credit-credit-cards