Will I ever be able to get a Mortgage

ryanoeix

Hi

I have just turned 21

When i was 18 i went crazy on taking out loans I had £1500 natwest loan £1300 natwest loan again and a £900 overdraft that was fully taken out with natwest

I also used to get payday loans from loads of diffrent companys....quickquid,wonga,payday uk,payday express,peachy,sunny,lending stream..

I got in a stepchange DMP been paying it off for every it feels like but i am nearly there and have paid £4400/£5000

My credit score is 1/5 lowest possible....

Im 21 will be living at home for a good 4 years most likely..

I will be finally out of debt in March...Everytime i get paid i have like £200 left...cannot wait to go from that to £900...

But will my credit score go back up? I totally messed up it cringes me thinking why did i take thousands of pound loans out...Also i never told my mum? I was thinking of explaining it to her once i paid it off she worries a lot and has seen letters but i always make up a story saying its junk mail...

Any advice please!

KirstyO

It will take time to repair your credit file (ignore scores they are meaningless, what matters is defaults and missed payments). Accounts stay on for 6 years after they are closed /settled/satisfied and if you have any defaults or late payments they will be visible to lenders. The fact you have a number of payday loans will also not look good. You may need to wait for these to drop off fully before you are considered for a high street mortgage with lots of incentives.

Once your debts are cleared you need to think about the steps you are going to take to fix it. The first is to make sure you are on the electoral roll for your current address. A mobile phone contract can be a good starting point (only if you can afford it of course!), some people take out a high interest, low limit credit card. If you do this its important to try and pay off in full every month or you may end up undoing all of the hard work youve done in clearing your old debts.

Check your credit files with all three credit ref agencies and make sure all the info is accurate. If its not you'll need to take any errors to the lenders and ask them to correct it.

After this its a waiting game. I have a default which is only coming up to 3 years old. I'm hoping to get a mortgage before it is 5 years old but i've been warned that i'm likely to need a bigger deposit and might gave to pay higher interest.

There are mortgage people on here who can chip in on this. Congrats on your progress so far, you're so close to debt free!

tlc678910

Hi Ryan,
Congratulations on turning your finances around!

You have learned to live well under your means while paying back your debt. Because you are living at home you could use the time while your credit rating repairs to save up a lovely deposit. (If you have not yet paid you're parents rent the end of your debt payments might be a good time to ask them about this).

You mention you have been managing on £200 a month and you can't wait for this to go up to £900. If you allow yourself £500 to live on, and save £400, after 6 years you would have a deposit of £28,800! If you allow yourself £400 and save £500 after 6 years a deposit of £36,000!!

If you are ready to buy with your deposit saved at around 27/28 years old you will be a whole lot younger than the average first time buyer!
Good luck

greensalad

I worry the same thing. I'm (nearly) 24 and am paying off my debts. While my credit rating is "fair" or roughly in the middle, I have three late payments on a credit card from a few years ago. I don't think 6 years will have passed by the time I really want to get a mortgage. Kicking myself for being so silly.

Firewalker

Yes, your credit score will recover but it will take time. There are things you can do to help along/speed up the process. You can start using a credit card that you pay off every month (so you use it as a debit card); you'll have to be on the election register and voting (I know Russell Brand tells you not to but voting is not only good for democracy; it is also good for your credit rating). And you'll have to have seriously high down payment. In other words, you have to use all signals to lenders that you've learned and you are to be trusted with their money.

Firewalker

sourcrates

For things like borrowing from a bank, such as for a personal loan or a credit card, they will only look at your last 3-6 month credit history, if you have missed/late payments on your file, it does not necessarily mean they wont lend to you, but of course other factors are involved in decision making as well.
A mortgage is different however, they will look a lot further back, as lending has become harder to get now for property purchase, your only salvation could be the six year limit, after which all negative entries fall off your file, and its like they were never even there.