Five year old adverse credit

garethw792

Hi,

Just looking for a few different opinions on what I should do to give myself the best chance of getting a mortgage in 2 years time.

I have 2 defaults (£300 + £184) which are not settled yet. I also have a ccj of £309 which is settled. They all come off my credit file in 2016.

I am looking at saving a 15% deposit by the time I apply. Looking at houses around the £100-£120k.

My salary is currently £26k and my wife's is £22k.

Do you think I should pay the 2 defaults off so they appear as satisfied, or will it not effect my application too much because they would be 5 years old by that time. Obviously I am going to seek a broker who deals with adverse.

Any advice would be greatly appreciated.

DandelionPatrol

Fairly damning that such trivial defaults remain unsettled, particularly if you are looking at putting together a deposit of £15000 or more. While they remain unsettled they are potential CCJ's

lisa110rry

I'd like, if I may to share a story with you which may put your situation in proportion, though the circumstances are commercial rather than personal finances.

I (as the company I work for) took a small claims court action to get payment of a circa £10k debt against a company. To cut a long story short, we were easily found for by the Court, but the company did not pay (interest was ticking). I became aware that the principal of the company found against was planning to tender for a large contract, so I contacted the defendant and insisted on payment, copying to the court. We were paid.

I see this as being similar to you having undischarged debts and asking for a mortgage. Do you think your creditors may apply for CCJs against you if they find you are applying for a mortgage to encourage you to discharge the debt? If they do, I doubt a mortgage will be granted, though I am no mortgage advisor.

garethw792

Thanks for the replies. That's exactly why I asked the question, sometimes it takes someone else's views to put it into perspective instead of thinking of getting myself into further trouble for the sake of £484, I was thinking 'that's an extra £484 that could go into the deposit pot'.

Out of interest, how would they find out I was applying for a mortgage?

Thrugelmir

Those unsettled defaults are a reflection of you as a potential borrower. Credit scoring is actually far broader than a mere score. The process profiles people and puts into into distinct camps.

garethw792

Thrugelmir wrote: »

Those unsettled defaults are a reflection of you as a potential borrower. Credit scoring is actually far broader than a mere score. The process profiles people and puts into into distinct camps.

So I'm assuming it would be best to settle these defaults now so that they would've been settled for 2 years at the time of applying?

I read so many posts on here saying (adverse) lenders accept defaults longer than 3 years ago.

DandelionPatrol

garethw792 wrote: »

Thanks for the replies. That's exactly why I asked the question, sometimes it takes someone else's views to put it into perspective instead of thinking of getting myself into further trouble for the sake of £484, I was thinking 'that's an extra £484 that could go into the deposit pot'.

Out of interest, how would they find out I was applying for a mortgage?

They would not. But sometimes, creditors leave things to 5.5 years and then go to court because they figure that you might not want a CCJ on your record for another 6 years - 11.5 in total ...

And if that happens, you might find that paperwork gets lost - or sent to an old address out of malice or incompetence, so you never get the chance to clear the debt.

owlet

When the defaults drop off your credit file, it doesn't mean that they are gone and there is no debt. It's just not showing on your CRF. You can still be liable for the debt (unless it becomes statute barred) and the companies you owe can still go to court and get a CCJ.

If I were you, I would just pay them and not gamble on losing out on your mortgage. If you get a CCJ, you will be waiting another 6 years - is it worth the risk for a "small" amount?

Thrugelmir

garethw792 wrote: »

So I'm assuming it would be best to settle these defaults now so that they would've been settled for 2 years at the time of applying?

I read so many posts on here saying (adverse) lenders accept defaults longer than 3 years ago.

If you default on a debt outright. Then the particular lender(s) concerned is never going to forget.

Adverse lenders price in the risk into the mortgage product that will be offered. Different market to mainstream lenders.

You need to look at the situation from the perspective that you need a lender. Whereas as a lender doesn't need you.

garethw792

owlet wrote: »

When the defaults drop off your credit file, it doesn't mean that they are gone and there is no debt. It's just not showing on your CRF. You can still be liable for the debt (unless it becomes statute barred) and the companies you owe can still go to court and get a CCJ.

If I were you, I would just pay them and not gamble on losing out on your mortgage. If you get a CCJ, you will be waiting another 6 years - is it worth the risk for a "small" amount?

Yes, I agree. Will definitely get on the case ASAP.

Do you think a full & final settlement would be looked at the same (given the date since the default). Reason I ask is 1st credit (the £300 default) offered me to pay £170 as a F&F.

garethw792

Thrugelmir wrote: »

If you default on a debt outright. Then the particular lender(s) concerned is never going to forget.

Adverse lenders price in the risk into the mortgage product that will be offered. Different market to mainstream lenders.

You need to look at the situation from the perspective that you need a lender. Whereas as a lender doesn't need you.

That's where the higher interest rates come in yes? I am willing to pay the higher rates until my credit file looks cleaner. I am currently tly paying £600pm rent. Not sure what rates I would be looking at and at what price for say £100k mortgage. Sure it wouldn't be more than what I'm paying now