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    • RachRubyD
    • By RachRubyD 5th Mar 18, 3:38 PM
    • 416Posts
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    RachRubyD
    Pay Day Loans and Credit Score Help
    • #1
    • 5th Mar 18, 3:38 PM
    Pay Day Loans and Credit Score Help 5th Mar 18 at 3:38 PM
    Hi just popping on here for a bit of advice.
    Not sure if this should be on this board as it more about credit rating or on the mortgage board sorry.

    Me and my husband are saving for a house at the moment.
    We both have a Lifetime ISA and will be looking to buy in July (due to the 25% bonus you get with a lifetime isa).
    We are both first time buyers and are top budget is 120k and we will have a 10% deposit.

    That's just a little background info but am a little bit worried as when I was reading the MSE Mortage First Time Buyer Guide it says that if you have had payday loans it can really affect your chances of getting a mortgage.

    Now my husband has gotten payday loans out in the past couple of years (his last payment was September 2017 and last loan he took out was in the July). He didn't tell me he had taken them out (wish he had or we wouldn't be in this mess). He obviously didn't know it would affect your credit rating because he paid them all back on time. He took them out to be able to get to his previous work (as he had to get taxi's everynight as worked till 1am) and then also when his dog got cancer he had to pay medical bills and couldn't do it in installments.

    I know that doesn't matter because its more than fact that you look like you can't cope financially and have to resort to a payday loan. No excuse but his parents and sibling always get payday loans so he didn't think it be an issue especially if your paying it back on time.

    Long story short, he now has a poor credit rating (used MSE Credit Club for Experian to check). Is there anything that can be done between now and July to boost it in anyway.

    I have an excellent credit rating but my wage is low around 10k a year but he has a better wage of around 18k as a Civil Servant.
Page 1
    • zx81
    • By zx81 5th Mar 18, 3:40 PM
    • 19,372 Posts
    • 20,700 Thanks
    zx81
    • #2
    • 5th Mar 18, 3:40 PM
    • #2
    • 5th Mar 18, 3:40 PM
    His credit file will show lenders how he has managed his credit in the past. The PDLs will be a problem, but can;t be changed.

    He now needs to build a better history - using a credit card regularly and clearing in full is the easiest way. Time will do the rest.

    Remember to ignore the credit ratings and scores. Just focus on managing your (and his) credit responsibly.

    Use a broker when you come to apply for a mortgage.
    • Gary_Dexter
    • By Gary_Dexter 5th Mar 18, 3:41 PM
    • 2,591 Posts
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    Gary_Dexter
    • #3
    • 5th Mar 18, 3:41 PM
    • #3
    • 5th Mar 18, 3:41 PM
    Neither of you have a score or a rating - ignore it.

    What lenders are interested in is your history.

    Some Payday loans may hinder your mortgage application - approach a broker first and see what they recommend
    • benten69
    • By benten69 5th Mar 18, 3:46 PM
    • 329 Posts
    • 1,326 Thanks
    benten69
    • #4
    • 5th Mar 18, 3:46 PM
    • #4
    • 5th Mar 18, 3:46 PM
    To be honest, most lenders wont look back that far. If you want to buy in July and his last pay day loan was taken out in July 2017 and paid off in Sept 2017 that will have been a good 12 months since the loan was taken out and 10 months since the loan was paid off. As long as you don't take out any more pay day loans and keep your finances squeaky clean between now and July you'll be fine. Don't worry about it.

    So don't go taking on loans or a load of credit cards in the next few months. Just live within your means, save as much as you can and show the bank you are financially responsible.
    Emergency Fund - 100% Complete | Motorcycle Fund - 2.2% Complete
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    • RachRubyD
    • By RachRubyD 5th Mar 18, 5:00 PM
    • 416 Posts
    • 320 Thanks
    RachRubyD
    • #5
    • 5th Mar 18, 5:00 PM
    • #5
    • 5th Mar 18, 5:00 PM
    Well he has just passed his driving test so is looking on buying a little run around. He has the money for the car but not enough to pay his insurance in a yearly lump sum. He will pay monthly which mean's having to pay more out overtime. Would it be a better option if he could get a credit card (maybe even a 0% one) and pay the full year of car insurance with this and then repay the credit card monthly, rather than just pay the car insurance monthly?

    We are getting a mortgage broker anyway as I know this will help our chances. Just anything than can be done would be great.
    • DCFC79
    • By DCFC79 5th Mar 18, 9:01 PM
    • 32,928 Posts
    • 20,736 Thanks
    DCFC79
    • #6
    • 5th Mar 18, 9:01 PM
    • #6
    • 5th Mar 18, 9:01 PM
    Well he has just passed his driving test so is looking on buying a little run around. He has the money for the car but not enough to pay his insurance in a yearly lump sum. He will pay monthly which mean's having to pay more out overtime. Would it be a better option if he could get a credit card (maybe even a 0% one) and pay the full year of car insurance with this and then repay the credit card monthly, rather than just pay the car insurance monthly?

    We are getting a mortgage broker anyway as I know this will help our chances. Just anything than can be done would be great.
    Originally posted by RachRubyD
    If he can get a 0% card that would be a good choice yes.
    • Tarambor
    • By Tarambor 5th Mar 18, 9:13 PM
    • 3,808 Posts
    • 2,839 Thanks
    Tarambor
    • #7
    • 5th Mar 18, 9:13 PM
    • #7
    • 5th Mar 18, 9:13 PM
    He has the money for the car but not enough to pay his insurance in a yearly lump sum. He will pay monthly which mean's having to pay more out overtime. Would it be a better option if he could get a credit card (maybe even a 0% one) and pay the full year of car insurance with this and then repay the credit card monthly, rather than just pay the car insurance monthly?
    Originally posted by RachRubyD
    Sorry but given the use of payday loans and having to get car insurance on finance are you sure you can afford to be buying a house with all the fees and costs that come along with it because it sounds like your finances are on somewhat of a knife edge.
    • Lauralou79
    • By Lauralou79 10th Mar 18, 9:37 AM
    • 251 Posts
    • 270 Thanks
    Lauralou79
    • #8
    • 10th Mar 18, 9:37 AM
    • #8
    • 10th Mar 18, 9:37 AM
    I would be very careful about taking anything on credit as this can take away from what the bank will loan you. Your finances sound very tight and your joint income isn't massive. Can you wait another 6/12 months and build up more savings? It will also help improve your credit record.

    House buying can be an expensive process, you need solicitors fees, fees for surveys, removals etc. You may also need money for furniture, repairs/decor when you move in. Also an emergency fund to cover repairs/job loss etc. There will always be unexpected costs during the process too.
    • Silvertabby
    • By Silvertabby 10th Mar 18, 10:29 AM
    • 3,438 Posts
    • 5,069 Thanks
    Silvertabby
    • #9
    • 10th Mar 18, 10:29 AM
    • #9
    • 10th Mar 18, 10:29 AM
    Credit history apart, it sounds like you don't have much of a deposit to put down. Also, I think you'd struggle to get a mortgage on your current joint salaries.

    10K is under minimum wage - do you work part time? If so, could you improve your finances by getting a better/full time job?
    • RachRubyD
    • By RachRubyD 14th Sep 18, 3:57 PM
    • 416 Posts
    • 320 Thanks
    RachRubyD
    Long time since I've been on here but thank you so much for all the advice you have given its been wonderful.



    Just to update for anyone who is interested or people in similar positions.



    My husband got the Aqua 0% Card and this has improved his credit score to good now.


    We planned to maybe have had a mortgage by now but unfortunately my mother has been diagnosed with Breast Cancer which thankfully was caught early but is undergoing prevention treatment. She works for the Nurse Bank (kinda like agency work where you don't get holidays or sick pay) she is only entitled to stat sick pay which is nothing and has a mortgage. So basically we are staying with her to pay her mortgage and bills till she is better. In this time though I have a new job with more hours so earn now 15k a year. We also managed to save 12k and putting away whatever money we have spare for legal cost.



    We have been to see a Mortgage advisor as well and its been really positive. He said with it being a year since he had a payday loan and his credit score being ok now shouldn't be an issue. We can borrow 150k but I would only really like to borrow 120-130k and we would have 10% deposit which he said is excellent as most people only have 5%.
    • Gary_Dexter
    • By Gary_Dexter 14th Sep 18, 4:02 PM
    • 2,591 Posts
    • 1,457 Thanks
    Gary_Dexter
    You've clearly ignored previous posts.

    Ignore the credit score and rating - they're not real and lenders do not see them.

    Your mortgage advisor should also know that - if they think you get a good mortgage based on a made up score and rating then you need to find another better advisor
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