Building up credit rating with a satisfied CCJ

confusedaboutcredit

Hi,

I'm new to MSE so sorry if this has been covered before. I want to rebuild my credit rating, so that in the future I am able to apply for a Mortgage after my CCJ has been removed from my credit file.

I understand from what I've read so far that a score is not important and companies use algorithms to work out whether you are a 'good payer' not the score given by CRAs. What I don't understand is what to do to perform better on the algorithm checks.

I currently have no outstanding debt (aside from a overdraft left over from when I was a student - I use the overdraft every month but don't go over the allowed limit). Details of my active and closed accounts are below -

• Bank account with £2,00 overdraft - Up to date for last 6 years, but live in overdraft.
• Gas bill - Up to date for 2 years, no missed payments
• CCJ - Satisfied (Judgement Date in 2014)
• 2 x Settled accounts (2014)
• 3 x Satisfied accounts (1 in 2014, 2 in 2015)

What is the best way for me to go about improving this? Is it OK to keep my overdraft or should I clear it? Is there any point in getting a credit card to improve my rating now or should I wait until closer to the CCJ dropping off? I'm only eligible for cards like Aqua / Vanquis so wasn't sure if it would look better to have a longer relationship with them for the next 4 years or wait until my CCJ has dropped and try for a card from a bank?

Thanks!

A4445

I would get a credit builder card now, you will have several years history once you CCJ comes off. Then you will be in good position to get normal credit once the CCJ has gone! I think barclaycard initial will accept you with one CCJ or Aqua Advance they reduce the rate every year!

Giddykipher

I would also try to get out of your overdraft. When applying for a mortgage, they don't just look at how you've conducted your credit accounts over the years but also the affordability. If you look like you need your overdraft, how would your cope if interest rates suddenly rocketed? They do a stress test of something like 7-8% at the moment so on that basis, they would find you risky. Definitely get a credit builder card, use it for just fuel or similar and pay off every single month. Eventually, you'll have a record of good history with them and then you can start looking elsewhere.

Just a point to note, the mortgage providers score on things like address history, electrol role etc. so ensure those things are in place now going forward. A lot of companies don't mind a CCJ providing it's been settled for over 3 years (depending on the amount of the original judgement).

I'm not an expert but my OH had bad credit and has spent the last 5 years doing all of the above to make himself better placed.

Hope some of this helps.

confusedaboutcredit

Thanks for all the tips - this is really helpful! Good to know about some providers not minding a CCJ - mine was only for about £200 (an old phone bill) and my overdraft is the largest sum I've ever owed.

I'm already on the electoral role and have been at my current address two years (owned by my partner) but we are about to move in October to a rent free property he is being provided with a new job. We will be renting our our current place and staying in the next place for 3ish years to save until my credit has improved enough to buy somewhere.

I'll sign up for a credit card now and will start reducing my overdraft each month.

Thanks again for the tips

confusedaboutcredit

One more question - would it look better to take a credit builder with Barclays over Aqua or does it not make a difference? Aqua has a lower APR but as I am planning to only use for food shops and petrol it will be cleared every month.

A4445

confusedaboutcredit wrote: »

One more question - would it look better to take a credit builder with Barclays over Aqua or does it not make a difference? Aqua has a lower APR but as I am planning to only use for food shops and petrol it will be cleared every month.

It doesn't matter who the credit card is with. When your credit checked they can see you have a credit card but not who provides it. All they see is credit limit, balance, and payment history.

Barclaycard have an eligibility checker so you can see how likely your application will be accepted. Capital One have one as well. I don't think Aqua have one but marbles do they are owned buy the same company.

FairWorldCitizen

As you have noted, the credit score is not necessarily the first ranking that a bank will check - although they will check the rating.

Each and every bank has a different way to check your profile, credit reports are only part of it.

Secondly this is likely depends on which product you apply for. Banks work on business rules, not algorithms because they maintain a huge catalogue of products (I specialise in the design of mortgage application systems).

Within these rules, or at least in the banks I have been working for until now, having a CCJ in your history is not so important when it is known as satisfied. You had a debt but you have been able to repay it.

You could think of getting a new job, or staying in a job for a long time, link your partner's credit history to yours if relevant etc.

Hope this helps.

solentsusie

FairWorldCitizen wrote: »

You could think of getting a new job, or staying in a job for a long time, link your partner's credit history to yours if relevant etc.

Hope this helps.

If you have a negative like a CCJ on your file currently and your partner has a clear history I wouldn't be linking their history as it will likely bring down their ability to gain credit in the short term whilst you wait for your CCJ to drop off. The same if they have anything detrimental on their record, it will be linked to you.