Rebuild credit score after PDLs

glitterunicorn

Hi,

I’m looking for a bit of specific advice as everything I can find regarding credit scores seem to be rather generic. I was quite silly with money when I was younger and got myself in a pickle with payday loans, I buried my head in the sand and it took longer than it should have to pay them off (including a DMP).

I am now debt free apart from an old overdraft and credit card which I am making payments to on a monthly basis and should have fully cleared within 12 months.

My partner and I would like to start saving to buy a house in the near future. I would guess that we will not be in a position to be looking at or applying for mortgages for at least 12 months, when I will be 100% debt free (I cannot wait for that day!)

I have a low credit rating due to my past and I don’t know if there is anything I can do to help increase this or whether I have to simply wait for defaults, late payments or PDLs to drop off?

I’m on the electoral roll, have been at my current address for 2 years and before that lived at the same address for 20+ years. I have a credit card with a £500 limit but I am not using this. Should I buy something and clear the balance every month?

Grateful for any advice for anyone who wants to hopefully be approved for a mortgage in the near future!

DCFC79

glitterunicorn wrote: »

Hi,

I’m looking for a bit of specific advice as everything I can find regarding credit scores seem to be rather generic. I was quite silly with money when I was younger and got myself in a pickle with payday loans, I buried my head in the sand and it took longer than it should have to pay them off (including a DMP).

I am now debt free apart from an old overdraft and credit card which I am making payments to on a monthly basis and should have fully cleared within 12 months.

My partner and I would like to start saving to buy a house in the near future. I would guess that we will not be in a position to be looking at or applying for mortgages for at least 12 months, when I will be 100% debt free (I cannot wait for that day!)

I have a low credit rating due to my past and I don’t know if there is anything I can do to help increase this or whether I have to simply wait for defaults, late payments or PDLs to drop off?

I’m on the electoral roll, have been at my current address for 2 years and before that lived at the same address for 20+ years. I have a credit card with a £500 limit but I am not using this. Should I buy something and clear the balance every month?

Grateful for any advice for anyone who wants to hopefully be approved for a mortgage in the near future!

Well first thing is to forget the idea of credit scores as only you can see them, lenders/banks see your credit file.


Use a credit card, even if its just for petrol or shopping once a week.


Get a first time buyer/ or help to buy ISA account setup and pay in x amount a month.

Willing2Learn

Just to add to the above.

Use your credit card for stuff that is already in your monthly budget, such as groceries or petrol. Then pay the full balance every month, after your statement is issue and before the due date.

The simplest method to pay the full balance, is to set up a direct debit for the full balance. That way, the card gets paid automatically and there is no chance of any forgetfulness.

glitterunicorn

Thanks, I’ll maybe start paying for groceries or something accounted for and have that direct debit set up.

I recently opened a LISA as well (and made my partner do the same), only paying a small amount in each month at the moment and then once Christmas has been, taking a proper look at how much I can reasonably save each month.

I’m just worried that any mortgage provider will look at my credit history, see PDLs and defaults and run a mile. I wouldn’t blame them but that’s not who I am any more and after being through that vicious cycle for years, will definitely never be again!

[Deleted User]

How old are the defaults?

You may need to speak to a broker who specialises in people with adverse credit histories

glitterunicorn

They range from 2013 (so should drop off soon) to 2016. The number of defaults/closed accounts has massively reduced as most PDLs were taken out either from 2009-2011 but I didn’t get serious about paying this off until 2014.

DCFC79

glitterunicorn wrote: »

Thanks, I’ll maybe start paying for groceries or something accounted for and have that direct debit set up.

I recently opened a LISA as well (and made my partner do the same), only paying a small amount in each month at the moment and then once Christmas has been, taking a proper look at how much I can reasonably save each month.

I’m just worried that any mortgage provider will look at my credit history, see PDLs and defaults and run a mile. I wouldn’t blame them but that’s not who I am any more and after being through that vicious cycle for years, will definitely never be again!

Not necessarily but you wont know until you speak to a broker as suggested.

The fact you have paid them off or making progress may help.

Are any of them paid off ?

glitterunicorn

All PDLs are fully paid off and this was done this year. I still have an overdraft and credit card from TSB that I’m making regular payments on as they didn’t accept a F&F offer.

At one stage, I had debts of over £10k and I have worked really hard to pay this off/reduce as much as possible and my debts are currently sitting at around £1.2k, which should also be cleared within 12 months.

I won’t be looking for a mortgage until I am fully debt free as I’m only just starting to think about saving for a deposit but I know credit history doesn’t change over night so hoping the effort that I’ve made makes a difference.