How can i ressurrect my creditworth for a mortgage?

positiveangel

Hi everyone;

As of January 2015 my Partner and I decided it was time to grow up and turn our credit rating around for a chance to get a mortgage in the near future and here's a bit of background on our situation:

JOB
Partner in a new job now for over 5 months
I have just recently secured a permanent full time job (changing to part-time when Uni starts in Sep 15)
Prior to this we were both in the same job for over 12 years

SAVINGS
We currently have £40,000 saved up and we continue to save £1000 each month; hoping to receive some compensation payout in a few months which would really be a bonus and a boost. Due to my injury I will be receiving pension of £620 a month from August (confirmed)

CREDIT
We have no loan or HP due to the fact that our credit has always been poor because of the bad decisions we both made. But I have 3 Credit cards which I try to pay off each month in brackets are our balances which stands as of now.Lloyds limit £500 (balance £59), Capital One limit £1200 (£292.76), Vanquis limit £2500 (£0)
and partner only has the one with RBS Limit £1240 (£116.97) we currently use our credit cards to do food shopping, fuel and other essentials and we try to clear it each month although last month we had a balance of £150 carried forward in total between Capital One and RBS CC. Reason being is that I read somewhere that the best way to rebuild credit is to use credit card and pay off.

We both have Defaults on our files, Mine was from 01/12/09 (£145) and the partner has a 5 year old default (£103) 01/06/10.

We both also have missed payments latest was OCT 14 (3), Nov (1)
Also both had used PAY DAY Loans in Nov 2014

We have no one to blame but ourselves for our situation; and now we are more strict with our finances; we have lost some whom we thought were good friends but turned out were just using us. A big and massive makeover was needed when reality finally hit us. And now we will need to move out by end of the year. May I please beg for advice on what we are doing and what we need to do please?

Are we doing the right thing with our credit cards?
If we keep working on our credit rating i.e. no missed payments when would we be able to at least get a glimpse of a Mortgage?

I welcome any advice please.

(apologies for the long essay) x

Foxy-Stoat_3

All you need do is never miss another payment again. Time is the only healer after defaults, assuming they are all marked as satisfied. Get on the electrol roll and dont pay for your credit scores.

You will be able to get a mortgage depending on the numbers.

positiveangel

Thank you Foxy-Stoat.

Yes Defaults are marked satisfied; we're on the electoral roll and we are currently paying monthly on experian and equifax credit.

libf

I would stop bothering to pay for Experian and Equifax. Use noddle for an overall idea of where your credit is at for free instead.

positiveangel

Thanks libf , this is the first time I'm hearing about noddle. Yes will be cancelling monthly subscriptions to these two credit agencies.

ACG

15% deposit and im sure you will have relatively normal rates as an option.
Possibly not quite high street rates but I imagine less than 4.5%. Once the deal finishes you could then potentially look to move to the high street.

positiveangel

Just an update....

I've just received a reply from the Lender which I have defaulted account with; They have agreed as a gesture of goodwill to remove the adverse history on my credit file. I'm so happy and now will await on my partner's letter to his lender.

Letter sent 18 May - agreed letter dated 01 June received today 04 June 15.

I'm so hoping this will boost up our chances of getting a descent mortgage.

Thrugelmir

Obvious question. Pay day loans and a £40k deposit.

Something's amiss. Lenders will be wary.

Jon_B_2

Thrugelmir wrote: »

Obvious question. Pay day loans and a £40k deposit.

Something's amiss. Lenders will be wary.

+1, that was my first thought. Why would you ever take out a payday loan or even carry high interest credit cards when you are saving £1k/month!

positiveangel

Thanks guys, yes we were ill advised by a family friend that pay day loan was ok. And we were just being young and stupid at the time to believe that. My partner was made redundant in Nov and later received a £40,000 lump sum which we've put into our savings. Sorry I should have mentioned it first. And in January with a help of a financial advisor we made loads of cut backs on the unnecessary expenses on ourselves, friends and family then only we were able to start saving £1k per month.

It has been a challenge but we've learnt a lot this past few months.

Teqpro

This is my view, its quite an easy one and forget the past it will just stress you out.

I would wait till 2016 for the defaults to be completely removed from your credit file.

Add a notice of correction to your payday loan explaining you were ill advised.

Also the credit card or debt that has the late payment showing you need to close it down, this is whats bringing your credit rating down. You can apply for another one later.

You need to use some of that £40k to make sure all your bills are paid on time. I.E set all your bills to pay by direct debit on the 1st of every month. When your lender asks for your bank statement they will see this history.