Advice on my Credit Report

kwright.mtc

I'm trying to understand the situation I am in regarding my credit report and when I can reasonably expect to be approved for a mortgage. Up to my early twenties I was financially irresponsible and made very little effort to plan my budget. As a consequence of this I found myself in debt with various companies (utilities, phone contracts etc..). Now I'm turning 28 and for the last 3 years I have made every effort to manage my budget appropriately. I set up a DMP to clear the debt, made sure to pay all of my bills on time and started to build my savings. Also, last year I was approved for a subprime credit card which I have been using to build some positive credit history.

As of now I have 5x satisfied defaults, all of which were applied in 2009 and should be gone by the end of the year.

I have one remaining debt of £350 to British Gas which will be cleared this year to close out the DMP. Despite this account hitting 6 Payments Late in April 2012 it was never registered as a default and has continued to be reported as 6 Payments Late every month that it has been paid through the DMP (33 months to date).

I also have one more satisfied account relating to a Halifax current account that I thought I closed down several years ago. As it turns out the account was never closed and had an outstanding balance of £6! As with the British Gas account, this was never registered as a default and has been reported as 6 Payments Late for 28 months until I cleared the balance and closed the account in May 2014.

My Wife and I had our first child 7 months ago and we are eager to buy our first property so we can continue to build a life for our family. We have savings for a deposit and are hoping to achieve our goal in 2016 when the defaults are gone and I have built some positive credit history. My concern is that the late payment history will hold us back for a further 6 years.

Thanks for reading. Any advice will be highly appreciated.

Tixy

You could try writing to the 2 creditors in question and pointing out that they according to the guidance on filing defaults that was in place at the time they should not have continued to mark your credit file as 6payments late and should have filed a default after you were 6 payments late.

However from what you say even if they agreed to do that you would be looking at a default of perhaps May 2012, which would obviously then be on your file until 2018.

Given that it would probably be best just to get them paid off as soon as you can - I'd use some of your savings and pay it off in full now, not carry on paying through a DMP.
Then once the existing defaults have dropped off I'd speak to an independant mortgage broker with copies of your credit files from all 3 agencies and they'll give you a good indication of which lenders would be likely to lend and at what LTV and rate.
Chances are you should be able to find a lender willing to lend by then, but may need a higher % deposit.

kwright.mtc

Thanks for taking the time to reply Tixy.

So I understand it to be choosing the lesser of the two evils. I could try to get the defaults retroactively registered and wait a further 3 years for a clean credit report. Or I could leave as is and attempt to get a mortgage approval with visible late payments on 2 closed accounts.

What are the implications of having '6 Payment Late' markers? Do they have a similar impact as a default?

I suppose it’s not unreasonable to say that there is less risk in pushing back our plans until all the defaults are removed and the report is clean than holding on to the late payment markers and hoping we can get an acceptance through a broker.