Arrangement to pay on credit reports

abk

Hello!
It's my first post so do bear with.

My boyfriend and I are currently saving for our first home. My credit rating is great - it's clean with no late payments and a high credit limit. My boyfriend however was previously on his mum's mortgage to help with the payments and to cut a long story short, they managed to fall into arrears a few years ago. They put an arrangement to pay in place, which started in Aug 13. They continued to make the mortgage payments on time and the arrears were then paid in full in a lump sum in Dec 15. They are in a good position again and are making payments on time again.

When we looked into his credit report, two of the credit agencies are reporting the arrangement to pay correctly and a broker told us that we would need 3 years of clean payments before a mortgage lender would even look at us. However when we used a ClearScore report, it shows all the payments that were made in the arrangement as green. It then made me wonder if an arrangement to pay is as detrimental as a late payment on your credit report? I do realise they stay on your report for 6 years, but would a lender not look at this favourably as he took action to sort out the debt? I just wondered how much of an impact they might have in a year's time.

Also, would he be better to show good payments on a mortgage account for the next year or so, or to come off the mortgage completely to prevent the risk of a late payment?

In an ideal world we would like to start looking into/applying for a morgage in 2017, but I wondered if we were being a little unrealistic.

Any advice would be much appreciated.

saverbuyer

abk wrote: »

Hello!
It's my first post so do bear with.

My boyfriend and I are currently saving for our first home. My credit rating is great - it's clean with no late payments and a high credit limit. My boyfriend however was previously on his mum's mortgage to help with the payments and to cut a long story short, they managed to fall into arrears a few years ago. They put an arrangement to pay in place, which started in Aug 13. They continued to make the mortgage payments on time and the arrears were then paid in full in a lump sum in Dec 15. They are in a good position again and are making payments on time again.

When we looked into his credit report, two of the credit agencies are reporting the arrangement to pay correctly and a broker told us that we would need 3 years of clean payments before a mortgage lender would even look at us. However when we used a ClearScore report, it shows all the payments that were made in the arrangement as green. It then made me wonder if an arrangement to pay is as detrimental as a late payment on your credit report? I do realise they stay on your report for 6 years, but would a lender not look at this favourably as he took action to sort out the debt? I just wondered how much of an impact they might have in a year's time.

Also, would he be better to show good payments on a mortgage account for the next year or so, or to come off the mortgage completely to prevent the risk of a late payment?

In an ideal world we would like to start looking into/applying for a morgage in 2017, but I wondered if we were being a little unrealistic.

Any advice would be much appreciated.

Did you know that potentially the outstanding mortgage on Mum's account could get taken off the amount any mortgage company is willing to lend you?


As it's not a self financing BTL (Mum's) it seems very likely.


I think the best bet is to try and come off the other mortgage if mum can afford the mortgage on her own.


The arrangement to pay isn't going to look good. Basically a breach of a mortgage contract.

abk

He will definitely come off the mortgage either way, but we didn't know if a years worth of good payments would look better in a mortgage lenders eyes, than if he only had a history of arrangements to pay on a closed mortgage account

webbscatering

this is similar to my credit file, I too fell behind on a mortgage and spent 7 years paying back the arrears along with the monthly mortgage payments this shows on my credit file as "AP" ?? I contacted Experian and wanted to know what it was they said it was an Arrangement to Pay and is worse that having a default notice put on your file. I find this an insult to injury as its like a double punishment I spent 7 years clearing the arrears and now I have to wait 6 more years to have it drop off my credit file. Is there anything I can do to get this taken off my file or is this just part of the system that punishes people for trying to work themselves out of debt.

abk

It's just not fair is it - you put your hands up to a mistake and are proactive enought to make an arrangement to pay the bank back and it's considered worse than a default on your account. How does that make any sense!? The credit world is so frustrating!! :mad:

20aday

Sometime ago I discovered a thread on this very sub-forum relating to Arrangements to Pay.

I had two (Capital One and HSBC) from when I'd entered into a DMP several years ago.

Although it could be argued they are 'factually correct' the general consensus on the thread was, that after six months, the account(s) should've been placed into default status.

Edit: took some time but here's the link:

https://forums.moneysavingexpert.com/discussion/4910894

Thrugelmir

abk wrote: »

It's just not fair is it - you put your hands up to a mistake and are proactive enought to make an arrangement to pay the bank back and it's considered worse than a default on your account. How does that make any sense!? The credit world is so frustrating!! :mad:

Doesn't matter what the default, i.e. breach of contractual terms is. It's how the matter is dealt with that matters. An ARP is a reflection of the individual as a potential borrower. Other lenders therefore need to be made aware of this. As extremely important information.

dumpyboy

Thrugelmir wrote: »

Doesn't matter what the default, i.e. breach of contractual terms is. It's how the matter is dealt with that matters. An ARP is a reflection of the individual as a potential borrower. Other lenders therefore need to be made aware of this. As extremely important information.

I ve said before arrangement to pay are the worse markers that can be put on your credit file , they should be limet to 6 years like a default or a default should show for 6 years after it s paid in full

Thrugelmir

dumpyboy wrote: »

I ve said before arrangement to pay are the worse markers that can be put on your credit file , they should be limet to 6 years like a default or a default should show for 6 years after it s paid in full

All the more incentive to clear a debt. Credit files are for making lending decisions. With inaccurate data lending costs would rise for everyone.

dumpyboy

Thrugelmir wrote: »

All the more incentive to clear a debt. Credit files are for making lending decisions. With inaccurate data lending costs would rise for everyone.

Would that be a bad thing, a more level playing field for everyone