Rebuilding my credit score whilst having debt

daniel198912345

Hello,

I've recently been looking into clearing my debts to start rebuilding my credit score as I'm trying to save for a mortgage to buy a house in the next 2-3 years however I have a few questions.

I just used noodle and it says I'm credit score is 530, which I know is really low and I expected that as I was silly when I was younger and got a couple of credit cards.

Which is the best way to get my score up then, below is my debts.

Lowell - 80
Lowell - 820
Arrow - 600
HSBC - 82 (no idea what this is but shows I've been defaulting since 2007)

The 2 big ones I've been paying £2 a month for like the last 5 years because again I was silly and never cared about my score as I was so young.

Should I start repaying these in big chunks? Some of them I don't think I've ever made a payment

Can I start rebuilding while paying these off?

Any advice would be appreciated. Thank you

[Deleted User]

daniel198912345 wrote: »

I was silly and never cared about my score as I was so young.

Nothing wrong with not caring about your score. No one else does, so you should continue to ignore it.

What you need to do though is to manage your credit in a way that will make lenders think you are a decent bet to lend to.

Clearing your debts is a good place to start, but you need to understand the status of each, particularly those that have defaulted.

daniel198912345

I don't really understand it all, should I pay the 2 small ones off in 1 payment? then concentrate on the bigger ones over a longer period?

I'm defaulting on all 4 every month - not sure what a default is?

Say with the big ones if I pay like £100 a month off each would I still be defaulting or would be score start improving as I'm paying them off? or will it start when they're all paid off?

Also won't they still show that I defaulted so many times even when they are fully paid?

[Deleted User]

They'll continue to show as defaulted, as you dafulated on the original agreement. They fall off your credit report 6 years after the date of the original default.

Satisfied defaults obviously look better than non-satisfied. But your score could do anything it wants, because it doesn't matter.

daniel198912345

So what would your advice be? First default on the Arrow was Aug 2011, and the big Lowell one was July 2012.

In the next 2 years how could I improve things to help me get a Mortgage?

I've heard getting a credit card and using it every month and paying back is a good way? obviously I'm in a better situation now and would pay it back montly and keep on top of things.

[Deleted User]

Getting a card and using it regularly, paying off in full each month will help to demonstrate good credit behaviour, so that is definitely worth doing.

But your mortgage options will be severely hampered while there are defaults on your file. You should look at paying them off or waiting until they have fallen off your file.

daniel198912345

So with the closed accounts can the lender still see them as I can?

Also does it matter if it takes me 1 year or 2 years to pay them off? - The faster the better or does it not matter, say like the last payment is a month before I apply for a mortgage, would that still have some effect?

[Deleted User]

The sooner, the better.

Dobbibill

Hi Daniel,

Welcome to the forum,

Your credit score is a made up number that only you ever get to see. This explains it better. What I believe you mean is that you want to improve your credit history.

Do you have a current account (not a basic account)?
mobile phone contract?
any other records showing on your credit report besides the ones listed above?
Are you on the electoral roll?

If not you may struggle to get the credit card of your choice so be mindful of this before you apply. This link will give you further information http://www.moneysavingexpert.com/credit-cards/bad-credit-credit-cards
If you are going to get a credit card, use it for groceries or fuel each month, something you would buy anyway and make sure you pay off in full. If you do get a sub-prime credit card then the APR is likely to be high, so not paying interest is a must. Set up a direct debit so that it is paid on time each month. Late payments will not look good at all. Although not guaranteed, there is an eligibility checker here you can use as a guideline.

Look at paying off your debt ASAP, big chunks as you suggested will clear them sooner rather than dragging them on for several more years.
As zx81 said, satisfied will look better.
If any of the debts are adding interest/charges/fees etc get them paid off first.

HTH

DB

daniel198912345

Thanks for the replies.

Yes I have a Lloyds current account
On the electoral role

them 4 showing defaulted and 2 others showing 'up to date' which are 2 bank accounts (1 of which I haven't used in years as I switched banks and didn't close the old one)

But lots in closed - don't know if they still can effect my ability to get credit?

Dobbibill

daniel198912345 wrote: »

Yes I have a Lloyds current account
On the electoral role

It may be worth giving Lloyds a ring and asking them if you have any credit card lending available to you at the moment. They should be able to tell you if you are showing as eligible to apply. That's not the same as being accepted but just asking a question will give you an idea without putting a search on your credit file.

them 4 showing defaulted and 2 others showing 'up to date' which are 2 bank accounts (1 of which I haven't used in years as I switched banks and didn't close the old one)

But lots in closed - don't know if they still can effect my ability to get credit?

Any long standing accounts showing as 'up to date' will be a good start. It shows stability and ongoing relationships.
All credit card companies use different criteria for credit so closed accounts may/may not impact some and not others. There's no hard fast rules. If the closed accounts are not showing as 'defaulted' that would be slightly better.

DB