'Very poor' credit score worry

luke1ok

Hi everyone,

Haven't been on here in ages! I'm trying to seek some advice from real people experiencing similar issues or have done in the past.

I'm 29, was very silly with money in my teens and early twenties which has affected my credit score badly. It's currently sitting at 382 on Experian which is classed as very poor.

I've got a few defaults against my name but no CCJs.

I'm yet to have a mortgage so my main goal is to improve my credit score so I'm able to get one within the next 5 years or so.

The positive thing about my situation is I'm only in 5k debt, which is a combination of an overdraft and an Amigo loan (to consolidate debt). I currently have 1 credit card with a £200 credit limit which I took out earlier this year to help improve my rating. This is the only credit I have been able to get for a long time.

I can't think of any way to improve my score apart from using my credit card wisely.

If anyone has any advice or guidance for me then I'd be very grateful.

Thanks

[Deleted User]

Good news. Your score is fictional and entirely irrelevant. Ignore it.

What you should be looking to do is build a good history. Eg -

settle defaults
be on the electoral roll
use a credit card regularly and clear in full each month
don't go over limit or miss payments
stay out of your overdraft.

But entirely disregard your score. It won't do what you expect it it to do, but that's fine, because you're the only one to see it.

Dobbibill

What debts did you consolidate onto an Amigo loan? Their APR is in the 49.9% range...ouch! Is it really working out cheaper for you?

Clear the Amigo loan ASAP.
Stop defaulting on your agreements.
and follow zx81's good advice above.

luke1ok

Thanks both,

My defaults have been settled. I just need to wait until they drop off my file.

I'm on the electoral role. (Thank god not the American one)

I do use my credit card, but I hear rumours you only want to be using 30% of the credit limit per month? Is this true for limits as low as £200?

I've been good with my repayments for the past 12 months. Don't think I've missed one.

Getting out of my overdraft is going to be tough but if it's a way to improve my score I will start trying.

I consolidated a load of old credit card balances and payday loan debts, plus people I owed money to... Not ideal using Amigo with those rates but it was the only way at the time to get rid of all the stress.

I plan on paying that off next year with inheritance funds, but as it's a credit file and I'm paying it off on time every month - doesn't this have positive effects to my credit history?

Thanks

[Deleted User]

luke1ok wrote: »

if it's a way to improve my score i will start trying.

D'oh!!! .

luke1ok

Deleted_User wrote: »

D'oh!!! .

I meant 'history'

[Deleted User]

Other than what you're doing, you just need time.

Lenders like to see low debt levels, ability to repay it, and general stability, over a long period.


But do get out of that overdraft. It basically shouts "I'm desperate and can't get through the month on what I earn".

Dobbibill

If you are struggling with an overdraft then maybe start treating it like another bill.

Use the account you have an overdraft on as a bills only account.

*If you bills come to £100 pcm & your overdraft charges come to £10 pcm then pay £120 pcm into the account. This will account for all bills, charges and start to decrease the amount owed. Use a different account for day to day spends.

Paying all your loans each month will demonstrate you are trustworthy with your commitments but with other factors it's not going to give you the overwhelming 'thumbs up' that you are hoping for.

Keep at it though, you are heading in the right direction but it will be a slow, steady journey not an overnight miracle.

*All figures are fictional......however I would love my bills at that cost pcm

luke1ok

Thanks for your replies.

Can anyone answer this?

---

I do use my credit card, but I hear rumours you only want to be using 30% of the credit limit per month? Is this true for limits as low as £200?

---

Thanks

[Deleted User]

Not so much, but keep away from the limit.

Fromply

I'm not an expert, so you shouldn't accept what I say here without confirmation from the more seasoned posters.

If you're paying 49.9% APR on your Amigos Loan, then this should be an absolute priority to clear - above all else. You should seek out all the credit you can get at lower rates and use it. For example, your credit card with a £200 limit - you should make the minimum payments on this each month and look to max out your balance (being very VERY careful not to go over your credit limit) - I'm presuming your credit card has a lower interest rate.

I think it would be helpful to you (and to us) if you listed all of your debts - amount and interest rate charged (along with any redemption due dates and scheduled interest rate changes).

If you're serious about getting a mortgage in 5 years time - then it sounds like you need to take drastic measures now. You should drastically cut your discretionary spending until your debts (especially those with excessive interest rates) are cleared - you need to examine all of your spending and see what you can manage without or where you can save until your debts are cleared.

Remember, getting a mortgage isn't just about having a good credit history, you will need to save up for a deposit too (but you shouldn't start saving until your debts are cleared)