How to Improve now that Creditors all settled with

bjorn85

Hi All,

In a short space of time all my creditors shall be settled with, as in next month. And I hope to apply for credit (mortgage) in spring 2018 all being well.

In recent history (last 3 years) there have been some defaults listed on my file due to issues at the time so my current rating/report shows an atrociously low score across all providers despite the fact that my amount of debt was never massive massive to begin with and that arrangements were put in place. I know that a much lower score due to that kind of thing is inevitable but mine currently is so low that if I X the present rating digit by itself it'll only just be in double figures (Clearscore).

What sort strategy do you think we could consider to get things looking like 'an average citizen' so that lenders may see us as normal beings?

Any suggestions or advice from experience shall be gratefully recieved,

Thanks

DCFC79

Well first of all your credit score or rating means nothing as lenders don't see it. Get yourself a credit card and pay it off in full.

Candyapple

First thing, sign up to Noddle, Clearscore and MSE Credit Club to get free access to all 3 credit reference agencies.

Are you on the electoral roll?

Do you have any bank accounts / mobile phone contracts / credit cards / water or electricity company for bills etc? If yes, do they show across all 3 CRAs?

bjorn85

Thanks, I'll check out Noddle and MSE (Hadn't heard of either).

Yes, on the electoral role, but don't subscribe to much other (credit wise) than a mobile phone contract (which is always on time). Yes, my report seems accurate accross 2 of 3 (Equifax & Clearscore)

Perhaps, like DCFC79 suggests, I should try and get a credit card and use it but doubly ensure it gets satisfied in full each month to rebuild a score?

Cheers

Ebe_Scrooge

bjorn85 wrote: »

Perhaps, like DCFC79 suggests, I should try and get a credit card and use it but doubly ensure it gets satisfied in full each month to rebuild a score?

Yes. Sensible use of a credit card is one of the simplest ways of improving your credit history - basically, a lender likes to see a history of responsible borrowing and repayment. Use the card for everyday expenses ( fuel, food, etc. ), stuff that you have to buy anyway. Never be tempted to use it as an excuse to buy something that you "want" but can't really afford !

But crucially, you absolutely MUST pay it off in full, every month, on time, without fail. Set up a direct debit ( most cards allow you to specify the DD to pay either the minimum payment, or the full amount, every month - choose the "full amount" option ). That way, there's no danger of you forgetting, or if you're away on holiday, or whatever.

The only thing to watch - for the first month, keep a close eye on your account. There have been cases where the first month's DD isn't taken, especially if you set it up only a couple of days before the "payment due" date. In this case, be ready to make a manual payment pronto.

But that aside, after say about a year or so of showing that you can handle credit responsibly, your credit file will look a lot healthier to prospective lenders.

Oh, and don't worry about the high APR if you end up having to go for a sub-prime card - since you're paying in full every month, you won't be paying any interest anyway.

Fireflyaway

My score went from 94 to 355 in a year by paying my cc on time (apart from one blip) being on the electoral role and not applying for credit. Although its improved I don't see it getting much higher due to the defaults in there. I'd suggest approaching a whole of market broker who can apply for the products you are most likely to be accepted for. Everyone's circumstance is different but based on what's happened to me, I don't think your score will suddenly shoot up. Only when the defaults are removed will it really get better. You can still get a mortgage with defaults though, its about affordability and your deposit s well as credit history. I'd love to hear how you get on. I'm planning a mortgage too but not till 2019.

Louk83

Hi This is my first post,
I am in same situation as Bjorn85 and plan to pay off in full 2 credit cards, a personal loan and store card within the next 6 weeks and plan on using voluntary redundancy money to do this.
My plan was to then apply for a mortgage at the end of this year, however I am bothered that my score which is currently 102 wont be at a reasonable score within the next 9 months.


Has anyone paid off a number of credits in full all at once and if so how long has it then taken for you to get a "good" score to be able to apply for a mortgage.


Any advice would be much appreciated


Thanks !

[Deleted User]

Louk83 wrote: »

Has anyone paid off a number of credits in full all at once and if so how long has it then taken for you to get a "good" score to be able to apply for a mortgage.

Ignore absolutely anything your score does.

Paying off your debts will put you in a much better position for when applying for a mortgage.

Louk83

Thanks ZX81
I am a first time buyer and not really clued up on how good a position you need to be in to apply for a mortgage, which is in itself quite daunting.
I am hoping that I wont have to wait over a year to apply for a mortgage.

[Deleted User]

If you have a solid history, free of defaults and missed payments etc, with a decent deposit saved, you'll be in a good place.

But consider using a broker, so your application gets placed correctly. There's no point in just banging applications into the lowest rate lender if you don't meet their criteria.

[Deleted User]

Louk83 wrote: »

I am in same situation as Bjorn85 and plan to pay off in full 2 credit cards, a personal loan and store card within the next 6 weeks and plan on using voluntary redundancy money to do this.
My plan was to then apply for a mortgage at the end of this year, however I am bothered that my score which is currently 102 wont be at a reasonable score within the next 9 months.

If you are redundant, how can you be planning on getting a mortgage at the end of the year?

Unless you've moved straight into another job, I would have thought you'd have more pressing concerns than your credit score.

Even if you have immediately moved into new full time employment, difficulty with getting a mortgage will only be exacerbated by having been employed for only a short time. Hopefully, you have a large deposit to counteract these difficulties.