How to improve a terrible credit score?

EddMess

Help please!

After 10 years of messing up my finances and credit, I have settled down, stopped hiding my head in the sand and finally paid off all my debt (that I can find). The mishandling of my credit has ensured I have an atrocious credit score and unable to find a credit card that I can use to build my credit back up.

I am now married and we want to buy our first home, we have a decent deposit in a LISA that I had prioritised over my debts, but now I cannot find a way of ensuring a mortgage application passes.

Is there anything I am missing? Do you have any tips please?

[Deleted User]

Ignore any of the scores and ratings. They're not of any use to anyone. Start by getting your three CRA files and see what appears on each.

Depending on what shows, you should be able to get a sub prime card or at least a hone contract or catalogue. Make sure you're on the ER and that all data on all files is accurate.

MaryNB

Credit score isn't seen by lenders, they only see your credit history and they have their own internal scoring system.

If you haven't done so already register on the electoral roll at your current address.

With regards to credit cards have you tried looking at credit building credit cards? There are cards with low limits and high APRs designed for people with poor or very little credit history.

Before you look at applying for a mortgage, get yourself a broker. Do you have any defaults, pay day loans, bankruptcies, CCJs on your file? If so you may want a broker that specialises in adverse lenders. 

EddMess

Thanks both.

I have my credit files and have completely wiped them of debt and have been on the electoral role for a long time.

The issue is, is that I do have defaults from the last couple of years, which is causing issues with receiving credit.

Is "credit building credit cards" the only way to improve your files?

[Deleted User]

No, but it's the easiest, most effective and free.

MaryNB

EddMess said:

Thanks both.

I have my credit files and have completely wiped them of debt and have been on the electoral role for a long time.

The issue is, is that I do have defaults from the last couple of years, which is causing issues with receiving credit.

Is "credit building credit cards" the only way to improve your files?

I had one when I first moved to the UK and the low limit was a bit of inconvenience but within a year I managed to get a mainstream card.

If you get one, use it every month, keep your spend to approx 30% of your limit and pay it off in full once you receive your monthly statement. 

However, if you are planning to get a mortgage in say the next 6 months or so, applying for a credit card might not be the best decision. Lenders don't like multiple significant credit applications in a short space of time, even if you can afford them.

Ebe_Scrooge

Defaults on your history will, of course, affect your chances of getting future credit.  The good news is that their impact will diminish over time - especially if they're superseded by plenty of positive ticks.  As ZX81 says, the simplest way to do this is just by correct use of a sub-prime credit card.  And to echo MaryNB's point, a good broker will more than likely be able to find you a reasonable mortgage deal, even with a less-than-perfect history.

(As an aside, if you do obtain a credit card, be aware that your score will drop even further.  But, as has already been stated here, and has been repeated thousands of times on this forum in general, it's utterly meaningless)

EddMess

MaryNB said:

EddMess said:

Thanks both.

I have my credit files and have completely wiped them of debt and have been on the electoral role for a long time.

The issue is, is that I do have defaults from the last couple of years, which is causing issues with receiving credit.

Is "credit building credit cards" the only way to improve your files?

I had one when I first moved to the UK and the low limit was a bit of inconvenience but within a year I managed to get a mainstream card.

If you get one, use it every month, keep your spend to approx 30% of your limit and pay it off in full once you receive your monthly statement. 

However, if you are planning to get a mortgage in say the next 6 months or so, applying for a credit card might not be the best decision. Lenders don't like multiple significant credit applications in a short space of time, even if you can afford them.

Ok that makes sense, I will give that a go. Thank you

[Deleted User]

MaryNB said:

EddMess said:

Thanks both.

I have my credit files and have completely wiped them of debt and have been on the electoral role for a long time.

The issue is, is that I do have defaults from the last couple of years, which is causing issues with receiving credit.

Is "credit building credit cards" the only way to improve your files?

I had one when I first moved to the UK and the low limit was a bit of inconvenience but within a year I managed to get a mainstream card.

If you get one, use it every month, keep your spend to approx 30% of your limit and pay it off in full once you receive your monthly statement. 

However, if you are planning to get a mortgage in say the next 6 months or so, applying for a credit card might not be the best decision. Lenders don't like multiple significant credit applications in a short space of time, even if you can afford them.

Utilisation isn't really an issue with cards paid off in full every month, it'll only come into play with things like BT cards, a person with 25% utilisation who pays off 1% a month of their balance looks a lot worse than someone who uses 90% but pays every month in full, on time. It's not unreasonable with a credit builder account that might only give you £200 limit to spend say £100 on food + £50 on fuel every month