advice on pay day loans and credit checks please!

Jade1988

Hi everyone, I'm new here and just wanted a bit of advice.....

I have had a bit of a nightmare the past 6 months with using pay day loan companies such as wonga quickquid lending stream and sunny....I have finally plucked up the courage today to tell my mum who has lent me the money to pay them all off which I have.

Other than that I've had a normal loan in past 5 years which i never missed a payment, had credit cards which are paid off and all I have left now is a very account and an overdraft which I am planing to pay off in next 12 months now I don't have pay day loans ripping me off!

I want to get a mortgage around this time next year so my question is will these pay day loans go against me 12 months down the line or should I have my credit rating back up by then?

Thanks all x

MEM62

The payday loans will have a negative impact on you ability to get credit for some time to come. Some mainstream lenders will not touch you and others will want higher interest rates. As for a mortgage, it may be a good while before a lender will consider giving you a mortgage. Payday loans are viewed as the last resort for the desperate and lenders will consider that your finances are out of control if you have to resort to them.

Vikipollard

If you are planning to get a mortgage this time next year, then you must have at least some savings which you can pay off your overdraft, Very - and of course your Mum, who bailed you out.


Why not use your deposit money to do that and replenish it with what you must already be saving plus the payments you won't need to make any more?

Jade1988

Thanks for replies.

No I don't have savings, my partner is currently in Afghanistan with the army so we are planning to use his earnings as deposit plus I'm saving some as well now my pay day loans are clear.

Just hope that in 12 months mortgage lenders will see that I am now managing my money!

Thanks

Stabilo_Boss

MEM62 wrote: »

The payday loans will have a negative impact on you ability to get credit for some time to come. Some mainstream lenders will not touch you and others will want higher interest rates. As for a mortgage, it may be a good while before a lender will consider giving you a mortgage. Payday loans are viewed as the last resort for the desperate and lenders will consider that your finances are out of control if you have to resort to them.

I think this comment probably needs some clarification.. If you got behind with the payday companies (which you dont explicitly say) then if they have marked your credit file as such this will go against you until these late or missed payment markers disappear. They will be on credit files for 6 years but the older they get the less impact they will have. If you have not fallen behind and kept up the payment then actually there is no reason why they should go against you in most circumstances. The reason I say this is that anybody searching your credit file can see what type of finance you have (loan, mortgage, overdraft etc) but they cannot see who it is with. Having said that if a human were to look at your report they might work out that lots of short term 'loans' paid back within a month or so are probably payday loans and they might look dimly at this. However if you have taken several and always paid them back it might be seen as a good indication that you are going to keep to your commitments to any new lender. I hope that helps

longtermplanner

Stabilo_Boss wrote: »

The reason I say this is that anybody searching your credit file can see what type of finance you have (loan, mortgage, overdraft etc) but they cannot see who it is with.

That is what I thought. However this article http://debtcamel.co.uk/payday-loan-mortgage/ says

"When a mortgage lender looks at your credit history, they normally can’t see who the individual lenders are. Before 2012, it was hard for them to distinguish between a payday loan and any other short-term borrowing that you paid off. But in early 2012, Experian started to group payday loans separately from other credit cards and loans Equifax followed suit in early 2013."

Experian sometimes post here so perhaps they can say if this is accurate?

Stabilo_Boss

longtermplanner wrote: »

That is what I thought. However this article http://debtcamel.co.uk/payday-loan-mortgage/ says

"When a mortgage lender looks at your credit history, they normally can’t see who the individual lenders are. Before 2012, it was hard for them to distinguish between a payday loan and any other short-term borrowing that you paid off. But in early 2012, Experian started to group payday loans separately from other credit cards and loans Equifax followed suit in early 2013."

Experian sometimes post here so perhaps they can say if this is accurate?

I can confirm (because I have one or two from last year and I just checked) that when they search some of them use the description of 'advance against salary' and this is quite obviously a payday loan. However lenders definitely cannot see who they are with.

Jade1988

Thank you that is really helpful.

How far back do they check? In 12 months time without any further loans will I be okay? I never missed any payments.

Thank you

DCFC79

The pdl's will be on your file for 6 years I think.

Jade1988

Thanks but how far back do they check when u go for a mortgage?

YorkshireBoy

Jade1988 wrote: »

Thanks but how far back do they check when u go for a mortgage?

They will get (up to) 6 years data from the credit search, so the answer is (up to) 6 years.


Your question really centres around when will they 'not care' or 'not care as much' about PDLs on your credit file...and no-one here can answer that...for now, let alone how they'll view it in 12-18 months time when you go for your mortgage.