Poor credit-help

drspec

Hi,

I have just checked my credit score, didn't think it was too bad at 350...until I realised the scale began at 300. Is this correct?

I need to get a mortgage soon, I don't actually have that many defaults. On my Equifax report the 'Credit agreement' is red, but when I go into each individual one the majority of the months are green with only a few of oranges over the full duration. Is this because I have quite a few accounts as well as some defaults? I have:

• phone bill
• 2 credit cards-both approx. 50-60% used
• 4 store cards-2 with no balance, the other two with less than £100

I plan on paying the two store cards when I get paid and close all 4 accounts.

For the credit cards am I better keeping them as they are or transferring the balance from one to the other so its just one open file or keep them as they are and make payments to both?

I also have an overdraft of £1000 which I use. I had thought of getting a loan to pull together all debts-would be £2500 in total so its just one payment.

What option would be best?

The_Boss

drspec wrote: »

I have just checked my credit score, didn't think it was too bad at 350...until I realised the scale began at 300. Is this correct?

The scale doesn't begin at anything because your "credit score" doesn't exist. Nobody has a credit score.

I'd say you would be very lucky to get a mortgage anytime soon with multiple defaults as you imply from your post. What are the dates of your defaults?

drspec

I'm confused re credit score not existing, I signed up to Equifax and received a free credit report and paid to view my credit score. It was indicated that I had a credit score of 350.

The last default is June 2012.

Would having a guarantor help my mortgage application? I can more than afford the repayments and if required can up the deposit to 15%.

The_Boss

drspec wrote: »

I'm confused re credit score not existing, I signed up to Equifax and received a free credit report and paid to view my credit score. It was indicated that I had a credit score of 350.

The last default is June 2012.

Would having a guarantor help my mortgage application? I can more than afford the repayments and if required can up the deposit to 15%.

Oh dear...sorry to hear you paid for the "Experian credit score" which doesn't reflect how a lender would assess you. It is just a cash cow for them to make money. Lenders score applications using data from your credit file in conjunction with what you tell them on your application form (salary etc).

How many defaults are there in total?

drspec

Oh well, that was £5.95 wasted

11 between 2009-2012. Although 5were the same month as I switched bank accounts and they bank didn't transfer over my direct debits. I was told at the time this wouldn't affect my credit rating as it was their fault but this has obviously not been the case. The bank paid me the sum to cover the charges but perhaps because I didn't make the creditors aware of the issue it was reported as a default?

greenorange

With 11 defaults, and a variety of missed payments, I'm afraid it's highly likely no bank will touch you for a mortgage.

The_Boss

^ what greenorange said.

11 defaults...blimey. Although I think you should perhaps contest the five when the account switch over happened since they're supposed to ensure that these are set up correctly...unless you cancelled any direct debits yourself in the meantime?

DCFC79

With 11 defaults you have to ask yourself why would a bank give you a mortgage ? Maybe there is another avenue of which im not aware of.

optimist68

drspec wrote: »

Hi,

I have just checked my credit score, didn't think it was too bad at 350...until I realised the scale began at 300. Is this correct?

I need to get a mortgage soon, I don't actually have that many defaults. On my Equifax report the 'Credit agreement' is red, but when I go into each individual one the majority of the months are green with only a few of oranges over the full duration. Is this because I have quite a few accounts as well as some defaults? I have:

• phone bill
• 2 credit cards-both approx. 50-60% used
• 4 store cards-2 with no balance, the other two with less than £100

I plan on paying the two store cards when I get paid and close all 4 accounts.

For the credit cards am I better keeping them as they are or transferring the balance from one to the other so its just one open file or keep them as they are and make payments to both?

I also have an overdraft of £1000 which I use. I had thought of getting a loan to pull together all debts-would be £2500 in total so its just one payment.

What option would be best?

Your credit-worthiness is low because you have those defaults and are using a large proportion of your available credit.
I imagine it will take you at least 6 months, maybe longer to fix this.

I suggest for step 1: pay down both cards so your total credit use is below 10%. Pay off your overdraft.
Do not take out any new accounts or gain quotes. Do not move to any new contracts, e.g. phone, sky, etc. keep what you have running and run them well. You need to show a history of careful account management.
As for the defaults, if you can fix that situation, by writing to the company that the defaults relate to to have them removed, that would be good. The Credit Report company often does this for you if you notify them of an error on your report.

If you can't fix the defaults, then as long as those accounts are now OK, and either closed or being managed well, you should start to see improvement in your credit report.

I agree that you should close the store card accounts. I have two and they don't affect my report. But, the problem with having access to all that cash is there's a risk you might use it. Mortgage lenders might consider that, even if you've had the balance at 0 for a year or more.
Some credit is useful to show that you manage it well. But too much us unhelpful. Keep balance to 5-10% of available credit at all times and demonstrate that you use it and pay it regularly.

I would also stop relying on your overdraft. Until you can live without this facility and the use of the cards, you are presenting someone who cannot manage on their regular income, which is not good, especially if interest rates rise. Banks/BS will check affordability based on interest rates of 7% and maybe higher.