Credit advise please!

PrincessStanny

Hi there

I am hoping to get some advice from some of the experts out there and perhaps from those who have been in a similar situation.

I am currently working hard to get myself out of debt. I owe about £10,000 which is down from £15,000 as it stood back in May last year. I had a good credit history until I went on maternity leave for six months and took a big drop in pay, and also my unsupportive ex partner who did more harm than good. Anyway, I missed payments on almost all of my debts but have not actually gone as far as defaulting or CCJ's. Since early summer last year I have made all payments on time but have had an arrangement set up with Lloyds to pay less on my loan payments and towards my overdraft.

I am now in a position where I am paying the original loan payments and some towards the arrears and these should be paid off in full over the next 4 months, and I aim to have the overdraft paid off in 2 months. This will still leave some other debts from seperate creditors but like I said, these will be made on time.

My question to you is, will my credit file ever recover from this, particularly from the arrangements set up with the bank? My reason for asking is that in about 2 years time I plan to purchase my own home (once I am out of debt and have qualified in my profession). I am single at the moment and am making plans which follow that. There is a Homebuy scheme which is run by the Government and Homebuy agents which lend 12.5% each (12.5% from the Government and 12.5% as an equity loan from the participating bank) towards buying a home provided you meet the criteria. I have checked this out and other than having a 'good' credit history I tick all boxes.

I have had a look at the application out of interest and one of the questions is: Have you ever been bankrupt, insolvent, or made an arrangement with your creditors? Because of the arrangement with the bank I am now worried this will have a permanent effect and hinder me from following this route of home ownership.

Any comments on any of this would be greatly appreciated.

xxx

Snaggles

Hiya, it will affect your credit rating if you have missed payments or made a payment arrangement. I'm not sure whether or not it will affect you qualifying for the Homebuy scheme - someone on the mortgage board might know the answer?

Are you in a position yet to cancel the arrangement with your bank and return to making full payments? I underwrite mortgages (although don't deal with the scheme you are referring to), and if I was assessing a mortgage, I wouldn't consider it while you still have an ongoing payment arrangement (sorry ).

PrincessStanny

Thanks for the prompt reply. I am paying it off now and the arrangement should be gone by May. I am not looking to go into scheme until end of 2009 but am just wondering how much and for how long the arrangement (or any of my bad credit) will affect me once its gone?

Snaggles

I think your credit file shows your payment history for the last 36 months, but from experience (rather than any actual technical knowledge) it seems to have less impact on your score the longer ago it was. If you actually default on an account it stays on your record for 6 years, but it doesn't sound as though the accounts were ever in default from what you said, just delinquent, which isn't quite as bad.

PrincessStanny

Thanks for that I'm sure it will be ok by the time it comes to requiring the scheme but have read conflicting views so thought I'd raise the question.