How soon will my credit rating improve

Gezzie_99

Hello all,
Apologies for the in depth post before I start. I'm wondering how long it will take to regain a decent credit rating so that I can apply for a loan. A little background: 5 yrs ago I made agreements with 4 credit card companies and having frozen the interest on the accounts have been paying back small monthly payments. Total amount of debt was approx £12000-00. I have a mortgage that I have never defaulted payments on and a further credit card with a £3000-00 on it that I use occasionally and keep payments up on a regular basis. I am about to settle the debt of £12000-00 with the credit card/finance house companies and will have, as of March 1st a further £30000-00 sat in a savings account of which the majority will be used for a future house purchase. I run my own business and with dividends and salary have a more than adequate monthly income. However as a result of my credit card debts I currently have a noddle rating of 1/5. At some point in the near future I may want to purchase a vehicle and will need to top up the purchase price with a loan. I'm wondering at what point it will be worth applying for a loan, without the fear of rejection, if I require one? Hopefully someone here may be able to clear this up for me.
Many thanks.

[Deleted User]

While you still have arrangements to pay on the cards, you will struggle with mainstream credit.

It doesn't sound like adding a loan will help in any case. How much do you have saved for the vehicle? It would make more sense to buy a cheaper vehicle for cash.

MuddyFunster

The 1/5 score doesn't mean much, but it is at least and indication of your creditworthiness.

Here's your problem...

When you contacted your CC providers 5 years ago, I'm assuming, but you would have claimed a change in circumstances, this is fair and proper and in return they have offered you an "arrangement" different CRA's might call it something else - but experian called it an arrangment. It's the best kind of "black mark" something happens, you don't bury your head in the sand and work things out. Very grown up and sensible.

BUT - these are meant to be tempory - when circumstances improve you're supposed to go back to normal repayments, but lots of people prefer not to.

So this is how you look to an underwritter - in 2011ish you couldn't meet your commitments and entered an arrangment to pay "what you could" either things haven't changed so you can't afford any more than you were paying in 2011 - so why lend more, or things have changed and you've decided not to meet your commitments - so why lend more?

Things will improve once these are settled.