Mortgage application with a default for £150 on credit file - please read as it is not straightforwa

BaldNeil

Hi

Please read this as I am really stressing and need some advice!

I had a text today saying I owed Anglian water £150 from over a year ago. I immediately phoned them and paid but they said a default notice had been put on my credit file.
The debt arose because I moved into a rented flat as my then wife and I were in the process of divorcing. Sadly on March 29th 2021 she passed away, so I instantly vacated the flat and moved back into the family home to look after our two teenage boys. I thought I had sorted everything from the flat but in my haste to leave I overlooked the water bill. I know that it was totally down to me and wasn't set up on a DD. Apparently letters (they admit no emails were sent) were being sent to the flat, and the landlord despite knowing my situation didn't forward them on. (Not her responsibility - I know) - hence the unpaid debt.

I have checked my credit file and it has adversely affected it.

My question is this - I am looking to buy a house shortly and have I really messed up my chances of getting a decent mortgage?
My current situation is:
I have a house now with no mortgage (this will be my deposit) £400k ish
I have 2 credit cards with a combined facility of £23k BUT there is no balance and hasn't been for 6 years.
I earn over £50k 
This is the first adverse thing on my credit report ever ( I am 47 years old)
I have no loans or anything else that is adverse on my file - just the bloody £150 that is now paid!!!

Do mortgage lenders actually look at the credit file or is it just an algorithm and 'computer says no'?

Thanks for reading and any comfort anyone could offer would be great as I am totally stressed out about this.

BaldNeil

kingstreet

Most high street lenders are automated and a default from less than two years ago is likely to be an issue.

Other non-scoring lenders, such as a smaller building society may be more amenable provided the explanation. Seek independent broker help.

K_S

@baldneil Given that it's a single £150 utility default and you're only looking for a low LTV mortgage (assuming that as you appear to have a 400k deposit), you should be able to access mainstream rates.

Mind you, you won't pass every lender's "credit-scoring" but you should still be able to access a mainstream rate, either with a mainstream lender or with a building society that doesn't credit-score.

Do get a copy of all three of your credit reports - Experian (MSE Credit Club), Equifax (Clearscore) and TransUnion (Credit-Karma) and check if it's showing on 1, 2 or all 3 as that can also make a difference to your options.

BaldNeil

@K_S
Many thanks for your reply - I used checkmyfile and it's only showing on 1 report (Equifax) - does that make my chances better?

K_S

BaldNeil said:

@K_S
Many thanks for your reply - I used checkmyfile and it's only showing on 1 report (Equifax) - does that make my chances better?

@baldneil Definitely. If it's only showing on Equifax, you could potentially use a lender that only checks Experian and/or TransUnion (at both DIP and full application) and doesn't ask any explicit questions about defaults during the application process.

ACG

I think this is difficult as in theory it should be possible to get you normal rates but its not a given. 
Speak to the water company, write a letter/email and explain and just try to please to their better side. You never know.