Unsettled credit accounts

navigator2014

Hi,

I was hoping that some of the brains on this site can advise me on the best way to rebuild my credit history.

Im 30 and to cut a long story short, I took out a couple of credit cards (natwest - £250 limit, capitalone - £500 limit) in 2008 and defaulted on both of these around early 2012. This was due to a dispute between myself and both card providers which I was too stubborn to admit was my fault at the time. Both these accounts went into default in 2012. The capital one according to my credit file had an outstanding balance of -£750 and the Natwest had £250 at the time of defaulting.

In addition to this, I also had a current account with Natwest that I opened in 2002 (as a student account with a £2k overdraft). I also defaulted on this account around end of 2012. This account had an outstanding balance of -£2600.

Around the same time, I also had an o2 phone contract terminated (early 2013) and thanks to me ignoring this, I ended up with a CCJ. I settled this but unfortunately I couldnt do it within the one month window to have it removed completely from my file so I now have a settled CCJ from o2 for £226.

Now over the past few months, I have been making a concerted effort to improve my credit history.

I have taken out a Vanquis card in June and apart from 2 late payments right at the beginning, I have been keeping this account up to date.

I also have opened a Barclays current account in February 2013 which I have kept in the black since it was opened. Additionally in the past 3 months, I have added enough funds from my pay so that my current account now shows a very healthy balance (£10k+).

I have checked my experian rating which was obviously very poor (310) and my equifax which was equally as bad.

At the time of writing the current credit records on my credit file are:

Natwest Credit Card -£500 (account has been in default for 18months)

Capital One Credit Card -£750. This account was actually deleted from my credit file this month

Natwest Current Account -£2600 (account has been in default for 12 months)

Vanquis Credit Card - first 2 payments were late but last 3 have been on time. limit is £500 and I have been making payments so that the balance stays between 350 and 500.

Barclays Current Account - account has always been in the black since opened in feb 2013 but from feb 2013 to Jun 2013 it had my salary going in (1600 pm) but it would get spent quickly and be empty by the end of the month. Since jun 2013, I have been using it to build up some money to buy a car so the balance has risen from 0 to 10k in 3 months.

Barclays ISA - this account has a tiny sum in it now and has been dormant for while.

Car Insurance from universal finance - paid the whole of last years premium and every payment was on time. Have just started a new years agreement and is up to date. (roughly £50 per month)

Settled CCJ from O2 (CCJ was given to me in Jun 2013 and I settled it end of July 2013)



What further steps would you recommend I take to improve my credit file further? I would ideally like to look at taking on a mortgage in the not too distant future (i dont know what timeframe is realistic given my current situation). In an ideal world, I do not want to pay back Natwest for their Current Account because I feel they unfairly racked up the fees over the 8 years that account was going and a large proportion of that debt was their fees causing a spiral of debt for me at the time. Do you think that I have to clear this in order to improve my view to lenders to get a mortgage?

I know that I have to close the ISA asap as having a dormant account looks bad to lenders.

I also have done my financial planning until the end of January and should have an additional 7k balance in my account taking it to around 16-17k by the end of january. I will use this to pay off the defaulted credit card from Natwest as i acknowledge that was a result of my recklessness. The one I am loathed to pay off is the natwest account. Is there perhaps a middle ground like offering a settlement and how likely are the to accept assuming that they can see how much I have in my barclays account.

Thanks in advance

bsms1147

navigator2014 wrote: »

The one I am loathed to pay off is the natwest account.

By my calculations you have around £4000 of debt. You should pay this off now since you have £10,000 in your account, and then build your balance back up with the £7,000 that you expect over the next few months. You could contest the fees but by and large they will be deemed fair and in accordance with their T&Cs. You could try offering a settlement figure, they don't have to accept it.

If you are not already paying off the Vanquis card in full each month, do this, otherwise you will be paying interest when you don't need to be.

You appear to have a healthy income, the best thing you can do for your credit file is pay off the debts and show continued payments to your credit card.

navigator2014

I acknowledge the other debts as they were down to recklessness. However a large chunk of the natwest account was a spiral of fees they kept charging me which made my situation worse at the time. I have read up on some of these fees and a lot of them are now considered unfair and banks have stopped charging them. THis is why I am loathed to pay it off. I would be happy settling on a number with them but I dont want to pay them £2600. Atleast 600 (but I would say more like 1000) of that is their fees which spiralled.

I will definitely pay off the credit card default.

As for the vanquis card. I was told that lenders also like to look at how much money they can make from you (for example if you are looking at a loan) and so by paying off the account in full, they dont make any money from me and I look like a less attractive proposition. Is this the case?

stator

No, I do not believe paying off a card in full every month could have any negative effect.

Your best bet is to write Natwest a letter offering them full and final settlement for a certain sum. If they don't know you have money to pay it off in full they may accept the lesser settlement.

navigator2014

In that case, I will pay vanquis off in full each month and use that to make my fuel and food purchases rather than my current acc.

longtermplanner

I acknowledge the other debts as they were down to recklessness. However a large chunk of the natwest account was a spiral of fees they kept charging me which made my situation worse at the time. I have read up on some of these fees and a lot of them are now considered unfair and banks have stopped charging them. THis is why I am loathed to pay it off. I would be happy settling on a number with them but I dont want to pay them £2600. Atleast 600 (but I would say more like 1000) of that is their fees which spiralled.

You need to decide what your moost important priority is at the moment.

If it is getting a mortgage in the next 6 years, then you have to forget all about your gripes about previous credit and settle down to seriously cleaning up your credit file which means paying off your debts.

You admit the problems with NatPest were because you were too stubborn to face up to the facts at the time. Don't make the same mistake now.

Thrugelmir

Lenders simply aren't going to take you seriously in terms of a mortgage. A CCJ for a mobile contract. Two late payments on a credit card you only took out in June of this year.

Best you can do is keep your nose clean from now on. Save hard and build a larger deposit. Make sure that you register on the electoral roll every year. Sit back and let time heal your record.

pvt

If you think the NatWest fees and charges are unreasonable then first, pay off the whole outstanding amount, and then raise a complaint with them asking for a refund of whatever you feel was unfair or incorrect.

thebritishbloke

Always have a direct debit set up to pay off the credit cards in full, otherwise you're just looking to trash your file even more because you forget to pay it one day or whatever.

Time is the only healer.