Credit file and defaults

2babyboys

Hi all.  Wondering how and when my credit file will be better...I have a bunch of defaults due to drop off this year.  Since this period of financial hardship/health issues when I was served the defaults my income has doubled and I actually have a healthy savings pot.  I've linked my bank accounts to Experian hoping this will help?  I have paid my paypal credit balance off today in full. So apart from the original default credit I have I don't have any other borrowings. Will I see a magical credit score change when the defaults die (i know the score doesn't count for much) but how will I know my file is better for lenders? I actually want to help my son buy his first house next year and apply for a mortgage hence all these questions!  Many thanks all.

Mark_d

Your credit file is a track record of your credit accounts.  A lender wants to see that you've maintained relationships in good standing for a good period of time.

If your credit report will show that you've always repaid on time your overdraft, credit card, mortgage, utility bills etc. then your credit report could look quite good - especially if you've kept the bank account for the 6+ years...

CliveOfIndia

2babyboys said:

Will I see a magical credit score change when the defaults die (i know the score doesn't count for much)

It's not that the score "doesn't count for much" - it counts for nothing at all, given that a lender can't even see it.

2babyboys said:

how will I know my file is better for lenders?

Once the defaults have dropped off, they won't be visible to a lender any more, so your report will immediately be "better".  Although do remember, the free version you see isn't updated in real-time, unlike the paid version that a lender uses - so don't be overly concerned if you don't see them disappear immediately.

2babyboys said:

I have paid my paypal credit balance off today in full. So apart from the original default credit I have I don't have any other borrowings.

That actually may be a slight downside.  Although your closed account will be visible for 6 years (so a lender does have some historical data to go on), if you have no active credit products it can make some lenders a little jittery.  To maintain a good history, the simplest way is to use a credit card for routine purchases and always repay it in full every month.  Assuming, of course, that you can trust yourself not to use a credit card to go out and buy things you can't actually afford.

2babyboys said:

I actually have a healthy savings pot. 

Savings are not taken into account when assessing credit applications, so this won't actually make any difference as far as that's concerned.  Though obviously, it's eminently sensible to have a decent savings pot for your own peace of mind and financial security.