Once debt have been cleared how long for credit score to improve

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Superly_Vince
Superly_Vince Posts: 149 Forumite
in Credit file & ratings
Hi there,

I want to check how long it takes for a credit rating to improve. The reason I ask is I expect to receive a substantial amount of money in the next month or two due to a settlement, enough to pay for a deposit for my first flat and if required, some basic home improvements. So I'm keen to get everything in order and tidy up my credit report ASAP.

I've just checked my credit file and have 3 debts that need to be settled, one of which is for a mail order (which I plan to pay off in the next week £132, defaulted in 2012). Stupidly the other two are for payday loans in 2014, both £800 to be paid but the original balance was £600 each. 2014 was a bad year... VERY bad.

I have an overdraft which has been used for about 6 months. I haven't missed a mobile phone or utility bill at least 6-7 years now. I've been on the electoral register since I moved into my rented flat a year ago.

I'm keen to clear the debts in anticipation of applying for a mortgage but worried how long it will take for my credit score to improve so that I'm accepted. I'm worried I will get my hopes up and will be rejected. I've just been offered a new permanent job which I start in July so obviously, I wanted to get settled in over a couple of months. Ideally, I would like to start looking at flats by the end of the year beginning of next. Is that realistic?

Any advice would be greatly appreciated.

Thanks in advance.
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  • forgotmyname
    forgotmyname Posts: 32,552 Forumite
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    6 years.


    Ignore some random text..
    Censorship Reigns Supreme in Troll City...

  • Superly_Vince
    Superly_Vince Posts: 149 Forumite
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    forgotmyname wrote: »
    6 years.


    Ignore some random text..

    So for the next 6 years, I'm likely to be rejected?

    What do you mean by 'ignore some random text?' really sorry but it would be helpful if you could elaborate.
  • nic_c
    nic_c Posts: 2,928 Forumite
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    Superly_Vince wrote: »
    So for the next 6 years, I'm likely to be rejected?

    What do you mean by 'ignore some random text?' really sorry but it would be helpful if you could elaborate.
    Defaults fall off after 6 years, settled looks better than outstanding. So if you have defaults in 2012 & 2014, they'll fall off this year and in 2 years time. So assuming your latest default is 2014, then it will look better in 2020. Depends if you have anything more recent.
  • Superly_Vince
    Superly_Vince Posts: 149 Forumite
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    nic_c wrote: »
    Defaults fall off after 6 years, settled looks better than outstanding. So if you have defaults in 2012 & 2014, they'll fall off this year and in 2 years time. So assuming your latest default is 2014, then it will look better in 2020. Depends if you have anything more recent.


    Thank you for explaining.

    I definitely don't have anything more recent. 2014 is the latest date on my credit report.
  • Superly_Vince
    Superly_Vince Posts: 149 Forumite
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    nic_c wrote: »
    Defaults fall off after 6 years, settled looks better than outstanding. So if you have defaults in 2012 & 2014, they'll fall off this year and in 2 years time. So assuming your latest default is 2014, then it will look better in 2020. Depends if you have anything more recent.

    So realistically, 2020 will be a better year for me to get a mortgage? :(
  • nic_c
    nic_c Posts: 2,928 Forumite
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    Superly_Vince wrote: »
    So realistically, 2020 will be a better year for me to get a mortgage? :(
    Yes, and you will have two years to save more for a larger deposit and longer on the ER

    You can get a mortgage before once they've been paid, but rates will be higher. You could ask a broker and then see whether paying rent for 2 years until they are off is better than the extra it would cost to buy before.
  • Nasqueron
    Nasqueron Posts: 8,834 Forumite
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    Superly_Vince wrote: »

    What do you mean by 'ignore some random text?' really sorry but it would be helpful if you could elaborate.


    The SCORE that you are given is meaningless, that going up (or indeed down), doesn't make a jot of difference to whether you will get a mortgage. The only thing that matters is the content of your file.


    Get a credit card if you haven't already and pay it off in full by direct debit every month, get rid of the OD, stay in the place on the role for longer. You may need to get a specialist broker to get a mortgage in the next year but allowing the next 2 years could give you time to save a bigger deposit and provide some stability to your record
  • Richey_
    Richey_ Posts: 334 Forumite
    edited 1 June 2018 at 12:53AM
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    Go see an adverse credit broker, depending on the size of the deposit you should be fine this year :)

    Also if you are still a Special Constable have a chat with the Police Mutual Bank (PMAS) as they broker mortgages
  • Superly_Vince
    Superly_Vince Posts: 149 Forumite
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    Richey_ wrote: »
    Go see an adverse credit broker, depending on the size of the deposit you should be fine this year :)

    Also if you are still a Special Constable have a chat with the Police Mutual Bank (PMAS) as they broker mortgages

    I was thinking of 10% but I have to, 15% would be fine for me too.

    No, not anymore. I had to resign due to an injury that has never healed :(
  • Superly_Vince
    Superly_Vince Posts: 149 Forumite
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    nic_c wrote: »
    Yes, and you will have two years to save more for a larger deposit and longer on the ER

    You can get a mortgage before once they've been paid, but rates will be higher. You could ask a broker and then see whether paying rent for 2 years until they are off is better than the extra it would cost to buy before.

    Once the debt have been cleared I could have a 15% deposit. As for the flat, well... I was hoping to move fairly soon as I'm having issues, I'm a private tenant and the landlord is pretty bad. I'll give it more thought.
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