Old payday loans

Newbigsaver

Hi all

First time here on the money saving forum - in fact first time on a forum altogether! Ok, a bit of background about me. I'm 25 and have recently started saving with a nationwide save for a mortgage deposit isa in the hope of being able to get a mortgage in about three years time. I have recently paid back all my student overdraft which was 1600 at its largest and have no other credit available to me. I have direct debits for my phone, car insurance and union fees. However, the picture didn't always look so rosy. Back in 2011/2012 I took out three wonga loans. I was still a student at the time and had no idea that they fed into credit ratings etc. I paid them all back on time and never had any again. I have been reading about payday loans preventing people from obtaining mortgages. Would this still apply to loans taken out 4 or 5 years before the mortgage application? Any help is appreciated! I am very worried about this! I have worked so hard at improving my budgeting skills in recent years and would hate for silliness and a complete lack of understanding about money in my youth to affect me in the future! I thought money grew on trees and the world owed me the right to money for nights out and clothes!

Thrugelmir

The one advantage with Save to Buy is that it does earn you brownie points. As it demonstrates the ability to save regularly. If you keep your affairs in good order from now on. Then you should have little to fear from your past.

Newbigsaver

Thanks for that thurgalmir. It had slipped my mind that save to buy would show some commitment to saving. Hopefully a few years in the black will have me in good stead!

Nasqueron

Credit files disappear from your record after 6 years, PDL from 4-5 years ago may well be off the files by the time you apply for a mortgage - check the credit agency reports closer to the time.

Check out the MSE credit card soft search tool - see if you can get a credit card with some cashback or bonuses or at least one from your own bank, buy stuff on it, pay it off in full - shows you are a responsible borrower.

Experian_company_representative

Hi Newbigsaver,

While some mortgage lenders see payday loans as a negative on a credit report, this is not the case for all of them. As long the lenders can see that you are not reliant on payday loans, I don't think three loans from several years previous will give you any real problem when you start looking for a mortgage.

Our Ask James page discusses the issue of payday loans in more detail here, along with some links to other articles on the subject you may find useful.

Hope this helps, have a great Christmas!
regards
Neil