Defaults & improving my credit rating for a mortgage

thequeenoftoast

Hi,
So I'm new to actually posting on the forums..despite using them as a useful resource for advice for several years.

I'm seeking general advice as to how to improve my credit rating in readiness for when some defaults are finally removed at the end of the year, with a view to applying for a new mortgage.

A quick synopsis so you have more info -

I have previously had an excellent credit rating. However, following a break up with my ex partner, I foolishly closed and made sure all of our jointly held debts were settled but failed to get a joint account closed promptly. The joint account had an overdraft facility . My ex partner ran up the overdraft but failed to pay anything in. In the mess of splitting up and relocating all the post regarding this account was initially going to him, so I was not immediately aware of this state of affairs until it was too late and a default had been incurred . He then agreed to a payment plan for the debt and made two payments but then defaulted again, at which point the bank pursued me for it and I agreed a regular payment plan and paid it off . I stupidly did not think to make the removal of the defaults a condition of my plan. As a consequence I lost my current account ( which was with the same bank) and have been unable to obtain credit since.

When I met my new partner I could not obtain a mortgage, despite having a reasonable deposit form my previous property, so he purchased our current house in his sole name, and we got a deed of trust to protect my interest in it.

The defaults are due to be removed in November this year. We are keen to relocate , sell our property and buy a bigger one , with both names on the mortgage . The current mortgage provider we use ( in his name) is Nationwide, who I was with previously myself, and who we would like to continue to use on any new property . However, we are aware they generally only take good to excellent credit ratings .

So where I would like your advice is, what preparatory steps can I take to improve my credit rating in readiness for the defaults being removed ? Obviously I understand that the rating will be bad until they come off..but I am also conscious that no credit can be as bad as bad credit from the point of view of a lender.

I have been contemplating applying for a credit card or similar , which I would use minimally and pay my balance in full, in order to boost my credit rating for when the defaults are off . Any thoughts.

I have also contemplated opening a Nationwide savings account or one of the Save to Buy accounts they offer..just to increase our chances by being an existing customer .

My current circumstances are -

No credit cards
No loans
No overdrafts
One debit card with current account - been with this bank for 18 years
No significant savings
On electoral roll at same address for 5 + years

On credit rating only active accounts are my current account , my mobile provider and our broadband provider .

Apologies for really really long winded post ! And any help/advice gratefully received !

samtoby

I think its good to have a credit card or something to show you can pay things back on time even if you just put fuel or food shopping on and pay it off every month.

Good luck with your saving!

Tixy

Hi

Yes getting a credit card would be a good idea. You may find your existing bank would be willing to give you a card if you have been with the for many years, but if not then you should certainly be able to get a subprime card.

Having a savings account with nationwide could also help with regards to obtaining a mortgage with them, but I would only do this if it doesn't put you out particularly (i.e if you have some savings that you need to put somewhere anyway or have some surplus money to save each month), as it may well be that nationwide won't have the most competitively priced deal at the time you want to buy a new house.

I don't know if the save to buy account would help in your particular situation given that OH already owns a house and has a mortgage with them, but it could be worth talking to them to find out.