Credit Rating of 410

WCN87

I have the above credit rating after years of paying minimum amount on maxed credit cards worth £5500, I am pleased to say that as of today I have cleared it all in the space of week thanks to a PPI claim and a family member. How quickly am I likely to see that rating improve now? I must mention I have a default from 2011 that is marked as satisfied which obviously caused it to drop that low. Is it best to close all of these cards if unused?

I forgot to mention I want to apply for a mortgage within the next 6 months

bsms1147

Please take no notice of the credit rating, it is a largely meaningless number. If you are paying to receive it then cancel.

The default will drop off after six years. But it will become less important as time goes on, and some lenders will ignore after as few as six months after/if it is settled. What is important is that you stay on top of payments from now on and keep credit applications to a minimum. Ongoing I would use the credit card for a few purchases each month and pay off the statement balance in full so you can show you are utilising credit well. If you are not on the electoral roll where you live now then sort that out. Is there anything else on your credit file which may be negatively affecting you?

When you are ready to apply, see a mortgage broker.

WCN87

I have 4 open credit cards with unused credit, would you suggest closing two of them and leaving the other two on to make minimal purchases on and then repay the balance every month, particularly the credit builder cards?

The only other thing is I have utilised my whole overdraft on my current account which is at £500 and i havent paid that off yet. Does that matter? I made the mistake for the last 6 years that all my wages and bills were going in and out of my savings account rather than my current account, which is now switched.

bsms1147

It's just another line of available credit. Does your overdraft cost you anything? If it does, pay it off if you are able to as it ill be cheaper in the long run. If it doesn't then it shouldn't impact your application, but pay it off, again if you are able to, simply to reduce your available credit.

With the credit cards, a potential lender will see the maximum credit available on each and how much is used, not the rate of each. There are arguments for and against closing accounts. If you aren't using them then you may be seen to be underutilising (underusing) the credit available. If you have debts on some cards and close empty ones, the proportion of used credit would go up.

In your case as you have no debts on any I would close two; I would choose to keep open the oldest ones, though if these had low limits I'd consider keeping a newer one with a higher limit just in case something expensive came along. And as you say, small amounts through each remaining card, paying off in full and on time, after the statement is produced.

forgotmyname

410 or 2 chickens and a spam sandwich. Means nothing. The people giving you that score dont lend you money.

Thrugelmir

Depending on the value of the default. 3 years as a rough guide is a suitable length of time. Reduce the cards to ones you actually need. Clear the overdraft and manage your current account by staying in credit. Other than that get saving. As the the larger the deposit you have the more options you'll have available one it comes to obtaining a mortgage.