My credit file... Pay day loans and mortgage advice?

Legacy_user

Hi there
I am new to this website and have never posted on here before. I was after some advice if possible? I am 26 and earning £23,000. I am living with my family and the plan is that I am saving for a deposit so that I can get my own place.
Here's the advice part... I have basically in the past lived beyond my means and ended up with a poor credit score. The last time I checked on Equifax it was around 371 and poor rating. I have had numerous pay day loans in the past and I have missed payments in the past. I have not missed any payments since I have been in my current job which is over 2 years and I believe prior to that I was paying on time as well. It was generally my phone bill that I paid late when I was not working.
I do have some debts as well
These are
£2000 Natwest overdraft
£1500 TSB OD
£630 HSBC OD
£1500 capital one card
£900 Aqua card

I have just paid off a Vanquis card and catalogue account that was around £1000. I have a Sunny Loan that I am paying back as much as possible each month to clear the debt as quickly as possible. I do not intend and will not have any pay day loans in the future as I am serious about clearing my debts and then saving for a deposit. My family don't know about the state of my finances.
My goal for 2015 is to clear my debts completely and I have made a plan each month to do so. The question is that will the payday loans in the past affect my application for a mortgage? I think it will take me around 2 years on top to save for the deposit with family help and therefore it will be 3 years since I have taken them out. I don't have my head in the clouds I want real advice even if it's not want I want to hear. This is the long term goal so if it takes a long time I can handle that as I get on well with my parents and it is important that I clear my debts before I start to save as it doesn't make sense otherwise!
Does anyone know how this would affect a mortgage application? Additionally how long do payday loans take to drop off my file and how long doe searches take to leave? Does anyone have any tips on how to build my credit file back up?
Thank you in advance !

Thrugelmir

Make sure that you are on the electoral roll every year.

Clear those overdrafts and focus on maintaining one good banking relationship. May be worth seeing if any of the overdrafts can be converted into loans in order to settle them.

Time will heal the past. So little point in worrying about what's gone.

When you come to save for a deposit. Take a look at Nationwides Save to Buy scheme. As it will earn you brownie points. When it comes to obtaining a mortgage.

Candyapple

sm88 wrote: »

Does anyone know how this would affect a mortgage application? Additionally how long do payday loans take to drop off my file and how long doe searches take to leave? Does anyone have any tips on how to build my credit file back up?
Thank you in advance !

http://www.bbc.co.uk/news/uk-25098810

Searches are usually removed after 1 year with Experian and Equifax, Call Credit it is 2 years.

Experian_company_representative

Hi Sm88,

There is still some debate of the impact of payday loans on mortage applications. Our Ask James page deals with the question in more detail here.
While some lenders have send that they take them into account, others will still treat them as any other loan.

As they will be 3 years or older by the time you are thinking of applying, any impact that they could have should be substantially reduced.

Hope you find the link useful!
Kind Regards
Neil

System

Thank you very much. I will take your advice and clear the debts asap hopefully all will be thank you again

canadianben

I am in a similar position except I have cleared all my debts and will be applying for a mortgage in January I have saved a deposit but do have multiple pdl entries on my report the last one was from 15 months ago would u suggest I went straight to a sub prime mortgage lender my credit rating is 936

Tryingtomoveout

Hi

I also have quite a few PDL's on my credit report and am worried about the impact it will have on my mortgage application - looking to apply in about 6 months time.
I have asked around and almost everyone has told me to go with a broker and to be completely honest about all the bad points on my file- as this will give the best chance possible.

If you are not looking to buy for another 1 year or more then I think you should be fine. The priority is going to be making sure you pay off your debts in the quickest time possible, and making sure you do not default on anything. Get a copy of your credit file as well to see what the damage is any check there is not any false info on there.

Have you thought about putting your CC debts onto a 0% card if you can get one? especially if you can qualifty for a 0% or low percent balance transfer deal. Then focus on paying off your higher rate interest loans first... It goes without saying that Sunny should be your priority.

It might also be worth considering a weekend/evening job on top of your current job, even if you can only stick it for 3 - 6 months, it will be worth it in the long run.

I hope this helps and wish you the best of luck