Arrangement to Pay/Credit rating/New cards.

Cymrophil

Hello.

I currently have an Arrangement to Pay in place with an existing Credit Card which has been in place almost 4 years. This was set up after I lost control of my finances after being made redundant - I contacted the bank in question, discussed my problems and arranged set up the AP. My credit rating because of this is rated as "fair". This is the only credit card I have ever had and I have no other debts (except a student loan) and no missed repayments etc.. I was wondering if I could get some advise regarding this...

I work full time earning £16,000pa but still living with parents. My partner and I wish to try to get a mortgage sometime within the year. Could somebody advise me how the existing AP I have in place would effect our chances? Should I think about paying this off in full (around £1,200 remaining). Also, is it advisable for me to apply for another credit card at the moment, set up a DD to pay every month without fail, in order to demonstrate my reliability to creditors (as mentioned, my AP credit card is the only one I've ever had). Or will getting a new credit card do more harm than good with an AP in place? If this is advisable, which kind of card do you recommend? Would it do mare harm than good if I were to go for a poor credit rating credit card? I joined the credit club on this website which shows my eligibility percentage for approval for certain cards, it states I have a low percentage of success on the majority of cards I would normally go for (cashback cards specifically), but have a very good chance of being accepted to some one of the all-rounder cards (specifically the Tesco Bank 15mnths 0%) and obviously all of the poor credit rating cards.

On my MSE Credit Club dashboard, the main problem I have seem to be Credit utilisation where it states - "You're using quite a bit of the credit available to you. This may make lenders think twice about lending, as you may be over-committed. Consider whether you're able to pay off any of the debt you already have before getting more." As I have only ever had one credit card, should I consider paying off my existing AP credit card in full before applying for another? Or should I go ahead and apply for the Tesco card and if successful make sure I set up a direct debit and pay each month without fail which would hopefully help to improve my rating over time.

Apologies for the volume of questions.

Thanks for your help.

ukamber1

Cymrophil wrote: »

Hello.

I currently have an Arrangement to Pay in place with an existing Credit Card which has been in place almost 4 years. This was set up after I lost control of my finances after being made redundant - I contacted the bank in question, discussed my problems and arranged set up the AP. My credit rating because of this is rated as "fair". This is the only credit card I have ever had and I have no other debts (except a student loan) and no missed repayments etc.. I was wondering if I could get some advise regarding this...

I work full time earning £16,000pa but still living with parents. My partner and I wish to try to get a mortgage sometime within the year. Could somebody advise me how the existing AP I have in place would effect our chances? Should I think about paying this off in full (around £1,200 remaining). Also, is it advisable for me to apply for another credit card at the moment, set up a DD to pay every month without fail, in order to demonstrate my reliability to creditors (as mentioned, my AP credit card is the only one I've ever had). Or will getting a new credit card do more harm than good with an AP in place? If this is advisable, which kind of card do you recommend? Would it do mare harm than good if I were to go for a poor credit rating credit card? I joined the credit club on this website which shows my eligibility percentage for approval for certain cards, it states I have a low percentage of success on the majority of cards I would normally go for (cashback cards specifically), but have a very good chance of being accepted to some one of the all-rounder cards (specifically the Tesco Bank 15mnths 0%) and obviously all of the poor credit rating cards.

On my MSE Credit Club dashboard, the main problem I have seem to be Credit utilisation where it states - "You're using quite a bit of the credit available to you. This may make lenders think twice about lending, as you may be over-committed. Consider whether you're able to pay off any of the debt you already have before getting more." As I have only ever had one credit card, should I consider paying off my existing AP credit card in full before applying for another? Or should I go ahead and apply for the Tesco card and if successful make sure I set up a direct debit and pay each month without fail which would hopefully help to improve my rating over time.

Apologies for the volume of questions.

Thanks for your help.

Hi, I'm no expert so hopefully someone else will jump on thread soon but paying off that outstanding debt might be the best option and first step. I'm guessing once that is paid off, your credit file will show as settled and closed for this account. I'm not sure if this account is showing as defaulted on your credit file but defaults can show for 6 years but atleast if its paid off, this can only help your chances of getting a mortgage and getting a new credit card in the future.

Hopefully someone that knows a bit more than me, will confirm this for you!;)

DCFC79

Might be better if you pay the debt off and close the account. If you do apply for a credit card do as you mentioned and get a direct debit set up to pay it off each month, use it for petrol for example.

See if you can settle the debt by paying a lower amount, they might agree to it or not.

Remember your credit rating/score isn't seen by lenders, its just a number given to you by the credit ref agencies.

Westminster

AP is quite a poor marker for your credit file as it indicates you are unable to pay the contractual minimum payment.

What is worse for you, is it sounds like the account was never defaulted which means the record of AP will remain for 6 years from when you close the account.

In your situation I would pay the account off and close it ASAP.

Even if you close it today, it will be visible until October 2022 and unless you and your partner have a very sizeable deposit (probably at least 15%) then you will be left with a poor selection of mortgage lenders with much higher than headline interest rates.

Opening a new account and then spending a little each month with the DD to clear the full balance would be a good start towards demonstrating that you have turned a corner in your management of your finances.

I doubt it matter which kind of card you get - but probably go for whichever has the best chance of approval as you don't want lots of credit applications on your file.

20aday

I had a few Arrangements to Pay on my credit files when I encountered financial difficulties around 18/19.

There was a thread on here a couple of years ago which said after six months they should've placed a default on my account(s) after six months which would've expired sooner than the AP markers once all repayments had been made in full.

Edit: found it-there's a template here.

If you're in a position to settle the outstanding debt in full I'd write to them and see if they'll wether wipe the slate clean for you?

SeanG79

AP markers are ultimately treated the same as a default by most underwriters.

Follow 20adays advise above