How long to repair terrible credit rating

furrymoney

Hi
By the end if this year I should be debt free for first time in some 10 years.
I will then start saving money towards buying a home , and that will take 2 to 3 years.
However, my credit rating is terrible. I have defaults and a ccj on there. The ccj will pass the 6 year mark this year so I can have it removed. The defaults I will have paid off.

Anyone have any idea of the prospects of rebuilding my credit rating enough to get a mortgage, and how long it might take ?
I'm looking to start approaching banks some 2 years after clearing my debt, and would realistically have saved up to 10k by that point.
Is that long enough with good credit behaviour to rebuild my rating ?

Thanks

m4rc

It really depends on what will show on your file. Defaults will drop off after 6 years, so basically what they can see is a snapshot of the last 6 years but anything older that was bad (CCJ or default) will be removed completely.

If you have late payments, missed payments, going over limits, numerous credit applications in the past few months, that stuff all matters.

If you have a few accounts run well and nothing bad showing then that's going to look good. They would expect to see a contract mobile, credit card, bank account, probably a utility like gas or electric. If they are all paid up to date with no issues, you are on the electoral roll, no bad debts showing, then that's kind of all you can do and should be fine.

Mortgage lenders, well any lender really, just makes a decision based on the history, not a score or anything else. They will check you are paying on time, have credit, are on the electoral roll. They obviously want to make sure you can pay them back so your income is more important.

It's complicated but also kind of simple, if your file is clean then it should be fine. Opening a credit card and mobile contract the month before you apply for a mortgage is not going to help, they will want to see some history.

There is more to it than that of course but basic way it needs to work.

Good luck

Westminster

What are your default dates and amounts.

furrymoney

Thanks for your reply.
Interesting to understand that it's not just score, but history that's important.
Over the next few years of saving money there's no reason to miss any payments etc and so I'm hoping that 2 to 3 years of solid clean credit history will be enough.
I think I'll start reading more about credit history for mortgages so I fully understand what I need to do.

The effect of paying off all her debts had a wonderful effect on my wife's credit score very quickly , so there's hope for me yet :beer:
:money:

furrymoney

Westminster wrote: »

What are your default dates and amounts.

I haven't checked recently enough to give you firm dates. I think the most recent is 3 years ago , and total amounts for all come to around 1000.
Will paying them off at least make a difference to my file ?
And worse case after 6 years they can be removed so by the time I apply for a mortgage they will have gone ?

m4rc

furrymoney wrote: »

Thanks for your reply.
Interesting to understand that it's not just score, but history thats important

It has nothing to do with the score, the score is made up to make you pay to see what it is. I used to think it was at least indicative, give you an idea of how good or bad your credit file was, but seeing that mine across the three reference agencies range from 4 on Callcredit/Noddle, to 354 on Equifax/Clearscore and to zero on Experian/CreditExpert. I'm not a 'zero' according to the banks who have opened accounts for me, ormlemders who have given me credit limit increases.

Work on the history part by doing nothing bad, just pay things on time and don't get into any financial difficulties, only spend what you budget for and can pay back, never let a statement with a balance on be a surprise, always know what you will be paying every month until it's cleared, and you are doing things perfectly well. Worrying about a made up score is like worrying about what shapes the clouds will be overhead - nothing you can do about it and it really doesn't matter!

furrymoney

m4rc wrote: »

It has nothing to do with the score, the score is made up to make you pay to see what it is. I used to think it was at least indicative, give you an idea of how good or bad your credit file was, but seeing that mine across the three reference agencies range from 4 on Callcredit/Noddle, to 354 on Equifax/Clearscore and to zero on Experian/CreditExpert. I'm not a 'zero' according to the banks who have opened accounts for me, ormlemders who have given me credit limit increases.

Work on the history part by doing nothing bad, just pay things on time and don't get into any financial difficulties, only spend what you budget for and can pay back, never let a statement with a balance on be a surprise, always know what you will be paying every month until it's cleared, and you are doing things perfectly well. Worrying about a made up score is like worrying about what shapes the clouds will be overhead - nothing you can do about it and it really doesn't matter!

Great reply thanks.

I do now use a monthly budget i build myself using Google sheets. Every time we spend anything, I can quickly enter it into a form on my phone and it emails myself and my wife with an update of how much we have left this week to spend. If we stick to out weekly budget then the spreadsheet shows us how much we can save this month. It's transformed our monthly spending and we now live within our means.

Once our debts are paid off this year, we will not only be living within our means, but able to save up to £500 per month towards a deposit. No big purchases, no holidays etc. Just normal monthly expenses. So no credit in other words.
It sounds like this is the correct behaviour and its what a bank will like to aee. Debt free with minimal monthly expenses.

I shall continue my teaserch but you've given me good advice. Thanks .
:money::beer:

m4rc

furrymoney wrote: »

Great reply thanks.

I do now use a monthly budget i build myself using Google sheets. Every time we spend anything, I can quickly enter it into a form on my phone and it emails myself and my wife with an update of how much we have left this week to spend. If we stick to out weekly budget then the spreadsheet shows us how much we can save this month. It's transformed our monthly spending and we now live within our means.

Once our debts are paid off this year, we will not only be living within our means, but able to save up to £500 per month towards a deposit. No big purchases, no holidays etc. Just normal monthly expenses. So no credit in other words.
It sounds like this is the correct behaviour and its what a bank will like to aee. Debt free with minimal monthly expenses.

I shall continue my teaserch but you've given me good advice. Thanks .
:money::beer:

That's really good, I get laughed at because I use a spreadsheet and track every single last penny, but I tried several apps and fancy systems, some cost money (I'm trying to save not spend more, thanks) and none did what I wanted them to do. They all made me adapt to how they worked, and I found them awkward, repetitive and with large gaps.

So I built a spreadsheet, actually I'm still building it, today I added a small 'feature' that shows me the difference each month between the amount I'm paying off my debts and the minimum payments. It's simple, but it shows me what I potentially have if there was an emergency, I know hat technically I could have an amount to use and still be paying my debts. I tinker with it most days, I started in December 2014 and it has completely transformed our financial situation, not many people can genuinely track how much is in every account so easily, hey have a good idea but I make sure I know what we have and what we can afford.

If you can stick with yours you will find it becomes a habit really quickly and makes things so much easier, you will see ways to clear your debts quicker than you can when they are just statements, bills and receipts, you can see how not paying something for a couple of days means you can pay down another debt quicker saving interest, or get hold of some cash to pay for something rather than using a credit card.

It sounds silly to most I'm sure, but I tried a lot of different methods and systems and nothing ever worked, this just does.

My wife thinks I need to get out more though, to be fair she's not wrong!

furrymoney

m4rc wrote: »

That's really good, I get laughed at because I use a spreadsheet and track every single last penny, but I tried several apps and fancy systems, some cost money (I'm trying to save not spend more, thanks) and none did what I wanted them to do. They all made me adapt to how they worked, and I found them awkward, repetitive and with large gaps.

So I built a spreadsheet, actually I'm still building it, today I added a small 'feature' that shows me the difference each month between the amount I'm paying off my debts and the minimum payments. It's simple, but it shows me what I potentially have if there was an emergency, I know hat technically I could have an amount to use and still be paying my debts. I tinker with it most days, I started in December 2014 and it has completely transformed our financial situation, not many people can genuinely track how much is in every account so easily, hey have a good idea but I make sure I know what we have and what we can afford.

If you can stick with yours you will find it becomes a habit really quickly and makes things so much easier, you will see ways to clear your debts quicker than you can when they are just statements, bills and receipts, you can see how not paying something for a couple of days means you can pay down another debt quicker saving interest, or get hold of some cash to pay for something rather than using a credit card.

It sounds silly to most I'm sure, but I tried a lot of different methods and systems and nothing ever worked, this just does.

My wife thinks I need to get out more though, to be fair she's not wrong!

My wife kinds of like mine, as it gives her instant notification of our weekly budget. Very handy before she heads off to a shop

stever20

Hi,
I currently have problems with my credit rating. I have complained to Halifax regarding a default that was registered on my credit file in 2014. However, the credit card was placed on a debt management plan with some other debts back in 2004. So my argument was why have they placed a default on my credit file 10 years after I got into trouble. I have received a phone call from Halifax today saying that it may have been a mistake on their part due to a change in there computer systems and it should have been cleared off in 2010. They said they will compensate me. Not sure how much is acceptable following 6 additional years of negative impact on my credit file. So message is there is light at the end of the tunnel. Stand your ground and argue your case if you feel you have been mistreated.