Bad credit advice for mortgage application

Mrharrison86

Hi all,


First up sorry if this is the wrong place to post this - if it is if someone could point me in the right direction that would be great.


Bit of background - around 3(ish) years ago I got into a spot of bother with my finances. I had a number of payday loans and was on a lowish income (16k pa) unfortunately my youngest got ill and I went into head in the sand mode and completely ignored everything, making payments being one of the aforementioned ignored things.


So as a result of that I now have 3 defaults registered against me;


- £163 default registered March '16 from lending stream
- £828 default registered March '16 from lending stream
- £195 default registered March '15 from Capital One.


I settled the Capital One default in Jan 16, but the lending stream ones haven't been settled yet as I only found out about them when I checked my credit report recently. I have already entered into dialogue with Lending stream to see whether they would consider removing the defaults after I pay off the amount in full (they have thus far declined although have accepted that one of the previous loans they had given me was not right and have agreed to remove that from my file and take off the amount I paid from the amount I owe them).


These days I am a lot more sensible -


- I earn £45k pa
- I have a credit card that has a limit of £2500 and there is about £1000 on it (I always pay at least £500 of per month)


So what I wanted advice on was the following -


- should me and my partner get a joint account now? or would my horrid rating drag her down?
- We want to buy a house in 2-3 years. Is there any chance I'll be able to get one? or do I need to wait for the 6 years to pass so the defaults are removed from my report?


I've checked all of my credit reports and they all read fairly depressingly as you can imagine (I have 535 with Noddle which is very comfortably in the 'poor' rating!)


Any advice you guys can dish out will be gratefully received


Cheers,


Dan

Candyapple

Don't get a joint account, your credit history would definitely drag down your partner's.

If you want to buy in the next 2-3 years then hopefully the Cap One default would have dropped off leaving you with 2 defaults that would be 4-5 years old. There are lenders out there who would offer you a mortgage but bear in mind a) you'll need a larger than normal deposit and b) the rates won't be the best, but it's achievable. Speak to a broker closer to the time. If you want to be in the best position possible then yes, wait until all the defaults have been removed from your files.

The free versions to check your credit files are below:
Experian: https://www.moneysavingexpert.com/creditclub
Equifax: https://www.clearscore.com
Call Credit: https://www.noddle.co.uk

Ignore the credit scores given by the agencies, it is your credit history that matters. Keep saving, make sure all your info is up to date and correct across all 3 CRAs and keep it that way until you are ready to buy a house. Good luck!

Ebe_Scrooge

That's top advice from CandyApple. The only thing I would add : you say "I have a credit card that has a limit of £2500 and there is about £1000 on it (I always pay at least £500 of per month)". Ideally you need to be aiming to pay it in full every month, never carry a balance. Clearing in full every month will reflect positively on your credit history. It may only make a small difference, but every little helps, as the saying goes. It'll also save you a few quid in interest every month ( remember that unless you pay the balance off in full, you'll be charged interest on the whole amount, not just the amount that remains after you've made a partial payment ).

DCFC79

You should go and see a broker, see 2 or 3 if you like.

Mrharrison86

thanks for all the advice everyone. I'm going to just carry on behaving well with finances. I've taken your advice and paid off my credit card in full - I naively thought your credit looked better if you always had some (lord only knows where I thought that from)


Cheers!

cjmillsnun

I'll say that Candyapple's advice is good but not necessarily correct.

I recently got a mortgage with 6 defaults (completed on the house 6 months ago). I needed a 10% deposit (I put down 15) and I got it with a high street lender at their advertised rate of the time.

Get the defaults satisfied. That's essential.

Use the credit card for things you'd buy anyway (I use mine for diesel) and pay off in full every month. It builds up responsible use of credit.

Also if you have a PAYG phone, consider getting a sim only contract. It goes on your credit report, as a regular account, and is normally cheaper than PAYG.

Debt_suvivor

Me thinks from research I did in regards to mortgages and defaults
Satisfy the debt - important!
The age of the debt - in two to three years it!!!8217;s going to be towards tail end of the defaults. Think about it this way, credit file is like a history of how you have managed your financial affairs. A mortgage is a bit thing and someone with recent defaults may spell trouble!
Type of default- I don!!!8217;t know exactly how true this is but apparently they rank the type of default eg mobile is on lesser end of scale than a banking product

letitbe90

Mrharrison86 wrote: »

thanks for all the advice everyone. I'm going to just carry on behaving well with finances. I've taken your advice and paid off my credit card in full - I naively thought your credit looked better if you always had some (lord only knows where I thought that from)


Cheers!

Not naive. Paying interest is actually seen as favourable as it shows you are profitable, providing you are not missing payments!

Not to say paying it off in full is bad (why pay interest if you don't have to), but the key thing really is your utilisation of the credit card. Keep it 30%/50% (different schools of thought) at max.

JimmyTheWig

letitbe90 wrote: »

Paying interest is actually seen as favourable as it shows you are profitable

Paying off in full each month means that the credit card company is profiting from your spending at a very little risk to themselves.
But in any case, why would a mortgage company care how profitable you were to a credit card company? Surely they'd rather see someone who has enough money each month to repay their debts in full?

GM1880

I’m in a similarity boat. Me and my OH (faultless credit history and plenty of it) are looking to get a mortgage soon and I did have a CCJ, though that’s been set aside in the last week. Now i’ve ‘Just’ a £2000 default from 2014 which was satisfied in 2016.

Though I don’t expect to get the best mortgage rates from the High Street lenders, i’m hoping it should improve my credit file enough to get something better than with a CCJ. Very keen to get a better CC too as opposed to my current Vanquis and low limit Barclaycard.