Credit Report Plan for a Mortgage

matte134

I'm wanting to apply for a mortgage however my credit rating is in tatters at the moment so I've come up with a plan to resolve it and wanted to share it to see if anyone had any advice or suggestions. 

Basically I was in about £15k debt in 2021 and the endless phone calls and knocks on the door was sending me under so I decided to take out an IVA. I didn't do enough research into it and realised after about 2 years that it was the wrong decision. I discharged from the IVA early 2024 because my salary had increase considerably and I was earning bonuses from work and I didn't want that extra money going towards the IVA fees. 

Since discharging from the IVA, I have managed to remove one of my debts from my report (due to unaffordability complaint), paid off 2 defaulted credit cards and have a payment plan in place to pay off the big loan. 

Currently I have 2 defaults on my report, one will disappear Dec 2026 the other June 2027. My last missed payment was recorded in 2021. 

I have 4 credit cards atm with around £4k limit in total and no missed payments on them. Always keep my utilisation below 30%. 

My IVA marker will drop off in June 2027, so that is when I am planning to apply for a mortgage. By then I shouldn't have any defaults, no missed payments and my credit report should be looking a lot healthier. 

Question, at the moment I have 3 bank accounts but they are all digital banks, they don't offer mortgages. Is it worth getting a bank account now with a bank or building society that offers mortgages, build up a good rep with them so that when 2027 comes I have an option of a mortgage with them? 

Nasqueron

There isn't really any benefit unless your salary was going into that account every month and they could see your earnings but even then you'd do better just using the 4 cards each month, paid off in full and build a couple of years of credit history. That said, a broker might be able to get you a mortgage sooner, defaults and such in the past have less impact on a well managed credit file

springmagpie

Bear in mind that while the marker might "drop off" your report many mortgage companies ask you to declare if you have ever had an IVA etc. We faced the same when we applied due my husbands IVA. Ended up going to a specialist broker and getting a mortgage with Bluestone, whilst the interest rate was higher they work with people with adverse credit. 

Brie

Are you registered to vote?  That can help prove some stability apparently.

Also are you using or have available other credit beyond the cards you've mentioned.  I'm thinking phone contracts, monthly payments for car insurance, overdraft(s) - whether you use it or not.  If you own your phone outright and have a cheap sim only contract that's a positive.  Likewise paying for any insurance in full rather than getting a credit agreement with the insurance company.  And overdrafts - well obviously if you are maxing it monthly that's bad.  Dipping in to it occasionally is better but the fact that you have an overdraft facility will factor in to what you can afford in a mortgage as well as say something potentially about your money management.  

I've never been told that a broadband/TV streaming package is taken into account but my guess is that any mortgage company would consider this if looking at how much you are obliged to pay out every month.  On that basis you might want to ensure you are going for essentials only rather than a £200+ a month TV extravaganza.

MeadowsVale

A good broker should be able to get you a mortgage with a couple of paid off settled defaults.

I wouldn't worry about getting a new bank account just for the possibility of getting a mortgage with them as it makes no odds. My mortgage is with a bank who I don't have a current account with.