Building up credit score after CCJ

Tabby16

A few years ago I got myself into a bit of a mess. I lost my job and suffered with my mental health pretty bad and ignored all my payments. This resulted in a few defaulted Accounts and a CCJ. Since then, I’ve got myself back on track but obviously have a really bad credit score. It’s on 499 on Experian and has gone up in recent months. How can I continue improving it so that I’ll be able to apply for a mortgage in a few years?

My debts are currently just under £4k, I have three defaulted accounts and a credit card. One defaulted account and the credit card will be paid off next month. I paid off my CCJ and another defaulted account last month. I also paid off my overdraft. I still have it in case of emergencies but I’m not dipping into it. I’m making regular payments to my debts and paying extra when I can (I was made redundant again recently). I’m also paying my phone bill on time every month which I wasn’t doing a few years ago. I have nothing on finance, I pay for my car insurance up front and I can’t use my credit card because they blocked that when I missed a few payments (like I said, I got in a bit of a mess!) so I just have my debts and phone bill to pay for. 

I’m hoping to have everything paid off by the end of the year, will my score start to improve once they’ve all gone, or will it be as I pay each one off?

EDIT: Also, with the two remaining accounts I will need to pay off after this month, how is best to pay them? One is £2400 and the other is £1100. I have been paying an equal amount into both each month but would it be best to pay the smaller one off first and just pay the minimum into the larger one so I only have one remaining or split the money between the two?

cymruchris

Your imaginary score won't jump up the day your CCJ is removed (in fact it may possibly go down briefly). The score is a very vague general indication of your creditworthiness only seen by you. What's more important to mortgage providers? Good financial management. So between now and the time you're wanting to get a mortgage you've got to make sure everything stays squeaky clean. Payments on time, every time, without fail. If you have a credit card, use it, and if possible pay it off in full each and every month. Make sure you're on the electoral roll. If you use a PAYG mobile, consider changing to a sim only contract so that it gets reported to your credit files. Something that I used, and I have absolutely no doubt that it did help me, although there are always dissenting voices against it here in the forum, was to use a Loqbox. I paid in £200 a month over 12 months, and at the end transferred my £2400 into a new account. I looked at it as though I was saving up a little pot of cash, although on paper it's a loan, and now have a settled account on my files. After it was settled, I applied for a Virgin credit card - and was accepted. Prior to the Loqbox I only qualified for bad credit cards. My imaginary score has also crept up from 'Poor' to 'Good'. So - overall - a few things you can do to help yourself improve how you look to potential future mortgage providers.

[Deleted User]

Your score will drop further as you clear your debts but that's ok as it's not used by lenders or a guide to your credit worthiness. Lenders want to see low debt and responsible account management.

So just focus on clearing your debts and time will do the rest. Pay as much as you can to the highest rate debt.

Then build better history through sensible use of a credit card.