Advice on improving my credit

IWillBeFree

Hello

I would appreciate some advice please. I was recently declined for a re-mortgage which made me look at my credit reports more carefully.

I have recently started clearing my debt and have paid off just over £10,000 since the end of June. My remaining debt is on 3 credit cards, two on 0%. I don't use any the cards, just paying them off.

I have a default in my reports from March 2010, for £5,000 which was satisfied in May 2012. I have no other issues in my reports. I have not applied for credit for over three months, apart for the re-mortgage.

I would like to improve my credit reports to get another mortgage deal and to, hopefully, get a 0% balance transfer card sometime next year.

I understand my high level of debt is considered a risk by lenders but wonder if there is anything I can do to improve my credit reports. Some specific questions below:

1. I have a £3,000 overdraft which now I have paid it off, I don't use. Should I get rid of it?
2. My ex-partner is shown as a 'financial associate'. Should I write to the reference agencies to ask them to remove him?
3. Should I look for a credit card to use for something like fuel and pay off each month?
4. How long should I allow before I apply for a mortgage again?

Many thanks for any help
IWBF

[Deleted User]

IWillBeFree wrote: »

1. I have a £3,000 overdraft which now I have paid it off, I don't use. Should I get rid of it?

No.

IWillBeFree wrote: »

2. My ex-partner is shown as a 'financial associate'. Should I write to the reference agencies to ask them to remove him?

Yes.

IWillBeFree wrote: »

Hello
3. Should I look for a credit card to use for something like fuel and pay off each month?

Yes.

IWillBeFree wrote: »

4. How long should I allow before I apply for a mortgage again?

When you're ready to buy, see a broker, who will be able to place it with the most approprate lender.

IWillBeFree

Deleted_User wrote: »

When you're ready to buy, see a broker, who will be able to place it with the most approprate lender.

Thank you. Do I need to provide any evidence to the agencies when I ask them to remove my ex?

I am ready to buy, they just don't seem to want to sell....yet.

Ben8282

Agree with what has been said above.


Before you can remove your ex-partner the financial association, whatever it was, must have ceased. You can't remove him if you have any joint credit accounts.


Although I agree in principal that the financial association should be removed, if his credit history is substantially better than yours it may be better for you (not him) to leave the association intact.

Ben8282

The default will I assume drop off in March 2016.


You have managed to re-mortgage recently so things can't be looking too bad to lenders.


I am guessing here that you have increased your mortgage by £10 000 to pay off the overdraft and credit cards. If I can work that out so will potential lenders. Personally I don't think shifting unsecured debt to secured debt is a good idea at all (getting a CCJ or default is one thing; having your home repossessed is something else entirely) although I can understand that the debt is at a much lower interest rate.


While yes it would be good to get a new credit card which you will use for purchases and pay off in full without fail every single month, I have a feeling that you may find this difficult at the moment and suggest that you apply for one of the cards at the lower end of the market and if you are refused once stop all further applications immediately. If it is a high APR card it doesn't matter as you will be paying it off in full every month.


Try not to use the overdraft at all. Lenders have no idea of the credit balance of bank accounts so if the overdraft is never used for all they know you have £1000's there and can afford to pay off the 0% cards any time you want LOL.


Here are some other suggestions for consideration:
1. As you have paid £7000 off of the credit card debt, I am assuming £7000 is available within the credit limits of the existing cards. Do any of the cards offer existing customer balance transfers? Could you transfer the balance of the card that is not at 0% onto one of the 0% cards and then use this card as the one to be used for purchases to be paid off in full each month.
2. If you were to start using one or all of the existing cards for purchases, yes you would be paying interest on those purchases and would have to time your payments correctly so that you are repaying the purchases and not the 0% balance, but at the same time you could increase the payments that you are making to the cards. The higher payments would look good. If you are currently only making minimum payments to the 0% cards that would get rid of the minimum payment markers and show potential lenders that you do have money to spend each month. There is also a possibility, I emphasise possibility, that the increased activity on the cards and the higher payments may make some existing customer balance transfer offers appear.


You say that you want to improve your credit rating in order to mortgage again. If the purpose of this mortgage is going to be to transfer more unsecured debt to debt secured on your home DO NOT DO IT.

IWillBeFree

Ben8282 wrote: »

The default will I assume drop off in March 2016. Yes


You have managed to re-mortgage recently so things can't be looking too bad to lenders. I re-mortgaged 3 years ago so yes but recently declined.


I am guessing here that you have increased your mortgage by £10 000 to pay off the overdraft and credit cards. If I can work that out so will potential lenders. Personally I don't think shifting unsecured debt to secured debt is a good idea at all (getting a CCJ or default is one thing; having your home repossessed is something else entirely) although I can understand that the debt is at a much lower interest rate. I am not sure how you got to this conclusion. I paid back £10,000 by budgeting, being frugal and being careful. No extra borrowing of any kind.


While yes it would be good to get a new credit card which you will use for purchases and pay off in full without fail every single month, I have a feeling that you may find this difficult at the moment and suggest that you apply for one of the cards at the lower end of the market and if you are refused once stop all further applications immediately. If it is a high APR card it doesn't matter as you will be paying it off in full every month.
Yesterday, following the earlier advice on here, I tried to get one of the 'rebuild cards' and used the eligibility calculator on MSE. It showed 95% of acceptance but it was actually declined when I applied which was frustrating and disappointing. I am not applying again so will leave things as they are for now.

Try not to use the overdraft at all. Lenders have no idea of the credit balance of bank accounts so if the overdraft is never used for all they know you have £1000's there and can afford to pay off the 0% cards any time you want LOL. Thank you. I will keep the overdraft but have no intention of using it.


Here are some other suggestions for consideration:
1. As you have paid £7000 off of the credit card debt, I am assuming £7000 is available within the credit limits of the existing cards. Do any of the cards offer existing customer balance transfers? Could you transfer the balance of the card that is not at 0% onto one of the 0% cards and then use this card as the one to be used for purchases to be paid off in full each month. I paid off one card at £4,500 approx and this was an account that was closed so cannot use it for further transfers. My remaining two 0% cards do not offer any deals at present but will keep an eye out for any offers.

2. If you were to start using one or all of the existing cards for purchases, yes you would be paying interest on those purchases and would have to time your payments correctly so that you are repaying the purchases and not the 0% balance, but at the same time you could increase the payments that you are making to the cards. The higher payments would look good. If you are currently only making minimum payments to the 0% cards that would get rid of the minimum payment markers and show potential lenders that you do have money to spend each month. There is also a possibility, I emphasise possibility, that the increased activity on the cards and the higher payments may make some existing customer balance transfer offers appear. I will think on this but think it may make it too complicated.


You say that you want to improve your credit rating in order to mortgage again. If the purpose of this mortgage is going to be to transfer more unsecured debt to debt secured on your home DO NOT DO IT. I have not transferred any unsecured debt to my mortgage, nor do I intend to but thank you, I appreciate your help.

I appreciate your input and have tried to answer your points as best as I can.

I simply want to be in a position to re-mortgage so that I can reduce my monthly payments in the short term, to increase my debt clearing. I have no intention of accruing more debt, I have learnt my lesson

[Deleted User]

I think you will need to wait until the default drops off your file before a remortgage is viable

downhillfast

Deleted User wrote: »

I think you will need to wait until the default drops off your file before a remortgage is viable

That's not neccessarily true. We don't know now all the details of LTV & income etc... plus the default is pretty old now and marked as settled. A good broker may be able to help the OP.

IWillBeFree

Deleted User wrote: »

I think you will need to wait until the default drops off your file before a remortgage is viable

I re-mortgage 3 years ago when the default was 2 years old so I don't think this is the main issue. Thank you though, I appreciate the input