Here are some questions I have seen recently about how long it takes to improve your credit score to get a mortgage:
- I was foolish with credit cards for years but now I am determined to buy a house – how long will this take?
- My credit score is dreadful. My new partner has a good credit record and we want to get a mortgage.
- I have a poor credit rating but I have now inherited a deposit. How do I improve my credit score so I can buy a house?
- My credit score isn’t good as I have never borrowed anything – how can I get a mortgage offer?
Each mortgage lender has its own policy on what is acceptable. But this article has general guidelines to help you work out what to do.
Does your credit rating really matter for a mortgage?
Some people say a credit score doesn’t matter for a mortgage. It’s true you can have a perfect credit score and be refused a mortgage. And it’s sometimes possible to get a mortgage at an OK interest rate with a much less than perfect credit score.
But credit records do matter.
The three fundamentals issues for being offered a mortgage are:
- Do you have a large enough deposit?
- Is the mortgage affordable for you? The lender will do a stricter calculation than you might think;
- How well have you handled credit in the past?
Your credit score is one of the ways lenders to assess the third question – how you have managed credit. So if you have a poor credit score, look at this in detail and think about how soon it will improve.
There is a big exception here. If you already have a mortgage and you want to get another fixed rate, your current lender will very often not bother to check your credit record at all, so the rest of this article may not matter – see After a fixed rate mortgage ends, fix again?
Get the facts
Start by getting all the facts about your debts, from each of the three credit reference agencies. If you only look at one, you may miss something bad on another one.
Here are the best free ways to do this: MSE’s Credit Club for Experian; ClearScore for Equifax; and Noddle for TransUnion (used to be called Call Credit).
When will your credit record be “clean”?
Check your three credit reports to find out:
- the dates of any defaulted debts. These disappear from your credit record after 6 years after the first default date on that debt. Don’t worry that defaults are still being added each month, these don’t matter;
- if any debts are marked as in arrears or in an arrangement to pay. These debts will drop off your credit record 6 years after the debt is settled;
- the dates of any CCJs. They will drop off after 6 years;
- the start dates of any insolvency – bankruptcy, IVAs or DROs. These disappear 6 years after the date (or when your IVA is completed if that is longer than 6 years).
Knowing these dates gives you a timescale to a completely “clean” credit record.
Don’t panic if it seems ages away – your credit record doesn’t have to be completely clean, as the next section discusses. But this gives you the facts and shows what areas you have to tackle.
Can you speed this up by paying the debts?
Paying problem debts (defaulted debts, debts in debt management or with an arrangement to pay) doesn’t improve your credit score. But it is essential that you repay problem debts before applying for a mortgage.
Many lenders have a policy that they will offer a mortgage if your problems happened a while ago, they have all been resolved and you haven’t had any more problems.
A rough rule of thumb is that you should be able to get a mortgage at an OK interest rate from a high street lender:
- if all your defaults were more than three years ago
- and you have repaid all the defaults and any arrangement to pay debts more than a year ago.
This may mean you need to change your plan. If you were going to repay your debts over the next three years and also save up the deposit during that time, it may be better to use all the money in the first year to pay off the debts the save the deposit in the next two years. See How to juggle repaying debts and saving a deposit for details.
If a creditor makes you a settlement offer, you may be worried that this will later harm your chance of getting a mortgage. In theory it can… but many lenders don’t care and for most people the key thing is to settle all their defaults as soon as possible. See Will partial settlement make it hard to get a mortgage? for more details.
Debts that have fallen off your credit records
I said you have to repay them all – this even applies when debts have dropped off your credit record. (An exception – if you haven’t paid anything to a debt for 6 years and it has dropped off your credit record you may be able to ignore it if it is statute barred, but that can be complicated to be sure about, see FAQs on Statute barred debt.)
Your credit record isn’t the only way a lender can see what debts you have – debts you are repaying also show up on your bank statements. And you can’t stop paying a debt when it disappears from your credit record or you will get a CCJ which wrecks your chance of a mortgage for another 6 years.
So your credit record may now look great if you are in an old debt management plan, but you are very unlikely to get a mortgage until the DMP has finished.
Lenders are more concerned about CCJs and hate insolvencies
Most high street lenders will not give you a mortgage if you have a CCJ still on your credit record, even if it has been paid.
If you have just discovered a CCJ you knew nothing about on your credit record – perhaps a parking ticket? – act fast and talk to National Debtline to see if you can get the CCJ set aside.
No lender will give you a mortgage if you have insolvency still showing on your credit record.
I’m not talking here about a “bad credit” mortgage – those are very expensive and should be avoided. A bad credit broker may say you can just remortgage to a cheaper one in a couple of years… but you may not be able to do this.
Some ways to improve your credit score faster
For problem debts
Do any of your default dates look too late? If you can get them changed to be earlier, the debt will disappear sooner. Also think if any of the debts with Arrangement to Pay markers should really have had a default added, so they will drop off sooner. See What should the default date for a debt be? for more about this.
It isn’t usually possible to get a default removed, but see When can you get a default deleted? for some examples. NB you do not want to do this if it means the debt will have an arrangement to pay marker instead, as that means the problem will show on your records for longer.
For insolvency, follow the rules on how to clean up your credit record after your type of insolvency: bankruptcy; IVA; or DRO.
For non-problem debts
Many mortgage lenders will also care about some other things which may surprise you. These are all good guidelines that will make it easier to pass the lender’s affordability checks as well as credit history checks:
- don’t use a lot of your credit limit on credit cards and catalogues. You need to aim to pay down these debts so that you are using less than 30% of the credit limit. Clearing the balance in full every month is best!
- it’s best to be paying more than the minimum amounts to credit cards and catalogues;
- no payday loans in the year before you apply for a mortgage. Even if you repay them on time they are seen as showing you aren’t good with money;
- don’t go over your overdraft limit. Reducing the amount you use your overdraft is good – and it will also save you a lot of money.
A “thin” credit file
It is incredibly frustrating to be turned down for a mortgage because you have never borrowed money in the past. If you have a great deposit and will very easily pass the affordability checks, talk to a good broker to see if any lenders will accept you. But if you don’t, what can you do?
The following suggestions may help a credit record with very little on it. They will not improve a credit record if there are a lot of problems.
- Get a “bad credit card”, use it each month for something small and repay it in full every month. This looks good to a lender and means you don’t pay the high-interest rate. This makes your credit rating worse for a few months but from 6-12 months you will see your credit score improving. Be careful with these cards – they are dangerous.
- You may have seen advertising for adding your rental payments to your credit record. At the moment there is no evidence that mortgage lenders take any notice of this, see Should paying your rent help you get a mortgage? Try it if you want, but don’t rely on this working!
- Another new idea is more promising – see how LOQBOX helps your credit score whilst you save. That too will take at least 6 months before your score starts improving.
Stop any new problems happening
If it’s going to take a while to sort out your old debts and/or save a deposit, don’t let any new problems land on your credit record.
Here are some tips:
- try to pay as much by direct debit as possible so you can’t miss a payment if you are busy/sick/on holiday;
- be careful when you cancel any direct debit or change address. Double check that all your old bills are paid so you don’t get a default. Water bills after a move and mobile bills when you have switched are a common cause of problems!
- make sure DVLA always has your correct address. CCJs from a parking ticket you didn’t know about are a disaster.
Go through a mortgage broker
It is always good to go through a broker. Look for one that covers the whole market, not the one an estate agent happens to recommend.
Not only can a good broker find you deals you didn’t know about, but they will also know which lenders to avoid if you have had different sorts of problems. See MSE’s recommendations for a good broker.
Other articles about mortgages
Some of these other articles may have good pointers for you:
- Getting a mortgage with debts This looks at the wider problem, eg the affordability calculations.
- 95% mortgages Great for first-time house buyers, but make sure you know the problems that can occur.
- very long mortgages. Things to think about before choosing a 35 or 40-year mortgage.
FormerlySkint says
Great post, The most frustrating thing for me when trying to improve my score to buy a house was how long it all took to actually update! My credit rating wasn’t awful, it was fairly average really, but I saved a huge chunk of a house deposit while sitting on a fair bit of student debt from my overdraft etc. When I paid this all off in one fell swoop. I was basically refreshing my credit score every 5 minutes for the next 2 months, as that’s how long it took to update with Experian that the debt was cleared!
That was definitely the most frustrating part for me, and something I hadn’t really considered to factor in time for.
Leila says
Hi,
I currently have a bad credit rating/history 1/5 with old defaults but no CCJ’s or IVA’s. My debts total up to 3,000 but with 6-7 companies. I am looking to pay that off and start planning for a possible Mortgage in the near future.
I am Self employed and have been for 4 years. I plan to pay off the £3000 within a month and start over. I have 2 credit cards all paid up. Am I doing the right thing? I m so confused with all the info and how I can ever get back into the Green. I am a single mum with 3 kids that has never had help from my ex husband. I now have a great income and just want to be Green again and live without the fear of a bad credit score.Thanks
—
Sara (Debt Camel) says
Do you have a list of the debts showing on your credit records? Check all 3 credit reference agencies (see https://debtcamel.co.uk/best-way-to-check-credit-score/) there is a lot of overlap but some firms only report to one of them.
For each debt, you want to know what the default date is on the credit records. Come back with the answers?
Leila says
Thanks for this! Yes I do, there are 5 on there and default dates are Jan 2014 and the latest being 2016 May. Though I am certain I defaulted way before then as my major problems started in 2012. In 2013-2014 I joined stepchange as I was drowning but fell off. Over the years I have tried juggling things here and there. However in the last year I have managed to clear off 2 that threatened a CCJ and paid towards the others on time. I am now expecting a bit of cash that can clear all in one swoop, though I would have exhausted all my funds. I have a contract that can bring me back up in a few months. I am up to date with all my bills. But I just find I am struggling with my credit. *sigh* don’t know what to do anymore.
Sara (Debt Camel) says
OK, the defaults will drop off after 6 years – so between 2020 and 2022. As they get over 2 years old and then over 4 years old the effect on your credit score reduces a bit (see https://debtcamel.co.uk/credit-score-change/) but with 5 it’s not going to make much difference.
Read https://debtcamel.co.uk/debt-default-date/ and think if you should ask for the 2016 default to be backdated a year or two. May work, worth a try. This will get you to a clean credit score sooner.
If you have any debts that have not been defaulted, think about asking for a default to be added in 2014. Otherwise these debts with late payments will still be on your credit record 6 years after they are settled. It won’t stop you getting a mortgage but will keep your credit score lower. These should probably be your top priority debts to pay off in full.
Repaying the debts won’t improve your credit score (daft, but thems the rules) but it’s essential if you want to get a mortgage.
There are high street lenders that will consider you if all your defaults are over 3 years old AND they have all been paid off for more than a year. You must go through a good mortgage broker, not direct to a lender though.
What is your realistic time to make a mortgage application? Are you saving for a deposit at the moment? Self-employed it’s good to have a 10% deposit if you can manange that?
If your realistic time to a mortgage is after 2020, then you could consider making a full & final offer to the debts with the oldest default dates. Very likely to get a 50% offer accepted. There will be a partical settlement on your record but that will all go 6 years after the default so a mortgage lender won’t see it.
Leila says
Hi Sara,
Wow! Thank you sooo much for this. I will work through the links and pay off the debts anyway :( I have a 9 months plan for the mortgage so hoping that will be our 2020 gift! 10percent is my target and I m almost there with the savings I have in place. I will contact the creditors today and will let you know how I progress.
Thank you very much.
Sara (Debt Camel) says
good luck!
First time buyer says
Hi,
Just a quick question. So basically I am looking to buy my first house with my partner, neither of us have any debt and have never been in debt or missed any payments, we both have a good credit score I believe. We also have a 15% house deposit for the house we like. However 1 month ago I spent several large amounts on online gambling running into the thousands which show up on my bank statements. How likely is it that lenders may refuse our mortgage application? Would it be best to wait 3 months until these transacations no longer show in the statements or should I try a lender who don’t ask for bank statements?
Any advice appreciated
Sara (Debt Camel) says
All lenders will ask for bank statements. Was this a complete one off, or are there always some gambling transactions but smaller showing?
First time buyer says
Hi,
It was literally a 3 week period where I had a lots going off and I ended up gambling, I have about 15 large transactions in and out of my bank account. All disposable income although I know that’s not the point. Nothing in the months prior to this and nothing for the last 2 weeks.
I don’t want 3 weeks of stupidity to ruin my mortgage chances
Sara (Debt Camel) says
I think you should talk to a good mortgage broker about whether you should wait.
Chris says
Hi there. I have had defaults on my credit file that have probably dropped off by now (more than 4 years ago). I have since never missed a payment, had a CCJ or IVA, but my payday loan usage has been massive. I have a good salary but been trapped in a borrowing cycle (but have still managed to pay every month on time). I now only have 2 PD loans outstanding with small balances. Once these have been paid, would I even have a chance at a mortgage? I’ve heard horror stories that Mortgage lenders won’t even look at an application if there is evidence of even 1 pay day loan, even if paid on time with no issues. My credit score is low purely due to my pay day loan usage. It should probably improve over the next few months. What are my chances? Have pay day loans literally ruined my life?
Sara (Debt Camel) says
“My credit score is low purely due to my payday loan usage.” That isn’t likely. Payday loans repaid on time don’t reduce your credit score.
Have you looked at your detailed credit records? Do this with all three credit reference agencies, see https://debtcamel.co.uk/best-way-to-check-credit-score/. Deafults only 4 years ago will still be showing, they don’t disappear for 6 years.
Once you have not had a payday loan showing for a year, you should be able to get a mortgage with a high street lender at an OK if the rest of your credit record is ok, but you will need to go through a broker to pick the right lender to apply to.
re the massive number of payday loans. Read https://debtcamel.co.uk/payday-loan-refunds/. Even if they were all repaid on time, if you borrowed from the same lender for month after month you may have a good reason to get a refund of some of the interest. It all helps towards that house deposit!
Kelly says
Hi Sara, I wasn’t sure what thread to post this on. I am looking for a bit of advice. My mortgage company recently wrote to me to let them know how I would be repaying my interest only mortgage as I now only have 3 years left. ( I don’t know why they don’t have these details as it was all arranged by the same broker). When I took my mortgage out I took an endowment out. (This has been a very good endowment) It is on track to pay my mortgage and at the moment It is on track to have a surplus of £20,000. I have just noticed though, that my interest only mortgage term ends on 24th May 2022, but my endowment is not due to mature until 18/08/2022 which is almost 3 months later! There are plenty of funds to pay the mortgage, but I cant get it when my mortgage is due to end. I have no other means of coming up with the money. What should I do?
Thanks in advance
Sara (Debt Camel) says
I don’t think this will be a problem. Explain the situation to your mortgage lender and offer to carry on paying the mortgage for another three months.
B says
Hi just wanted some advice and hope you can clear things up.
My 1 and only default will fall of my credit file at the end of the month. I’m currently only using 20% of my credit limit across my Amex and my Halifax credit cards.
How long should I wait to apply for a mortgage. It’s a help to buy one with a 75% loan to deposit mortgage.
I earn £60000/year with low outgoings?
Sara (Debt Camel) says
Has the defaulted debt been repaid? Or are you still making payments to it?
B says
No not repaid just been on there for 6 years.
Matt says
Hi
I have numerous closed accounts from payday loans ( which I’m currently trying claim)
Does having all these closed accounts ( settled) affect my credit score?
Many thanks in advance
Sara (Debt Camel) says
It won’t affect the headline credit score on the reports you see. but it may make some lenders less likely to lend to you. Especially mortgage lenders, see https://debtcamel.co.uk/payday-loan-mortgage/
Diana says
Hi,
I had a lots of settled, payday loans from last year and year before that. Noone asked anything, as they already one year old.
Good luck.
Diana says
Just wanted to say that we got the mortgage with my poor credit score and old default(5.5 years old).
We went with Halifax and there was no problem whatsoever for them to approve our mortgage aplication.
We also had 5000 debit(my fionce) and I payed all my debit off, thanks to advice on this website.
Snowball method works!
Additionally, we are completing today and we are just getting ready to go pick up our keys.
Good luck everyone.
Sara (Debt Camel) says
Brilliant news, I hope you will be very happy in your new home.
LOU says
Hi,
There are so many inaccuracies in my credit report and where I have contacted lots of the creditors. I have been ignored. All of my defaults came in 2012/2013/2014 when I was going through a divorce. Some of the Creditors have continously shifted my default date so it looks like I have recently defaulted when that is not true. And where 2 agencies have an unknown status due to the Creditor unable to prove the debt, Experian still carries the incorrect information. This is disheartening as I have tried my very best in the last 6 years to restore my credit.
I am particularly concerned about Hoist who are the same as Barclaycard.
3 Lowell accounts with false/inaccurate information.
Capquest, Kapama and the London Credit union. I have called and emailed most of these organisations and I have been met with promises to investigate and no answer for months. This is extremely frustrating. Please help.
Sara (Debt Camel) says
I suggest you send a formal written complaint to any creditors who are not responding, and send it to the Finacial ombudsman after 8 weeks if the matter is not resolved.
Katy says
I have recently been checking my credit report with Noddle as I hope to save for a mortgage soon.. I notice that although every account I have I spaid on time and I have no defaults from past it has barely ever increased. I have things like a sofa I pay monthly which clears next year, a credit card with only £1000 and interest free, and then my phone, TV and catalogue accounts which I clear every month so I don’t know what I’m doing wrong, any tips?
Sara (Debt Camel) says
What is your score? The credit card – what is the balance and what is the credit limit? Are you linked financially to anyone else?
EH1 says
Hi Sara,
I made a complaint to Virgin Money Credit Cards (previously MBNA until March 2015) about a minor infraction on my CRA’s files from a few years’ ago.
I received today a very polite and forthcoming response from them agreeing to uphold my complaint and make amends, relating to the date my account should have been formally marked as closed. My understanding from various sources was that late payments stay on a CRA’s file for six years after the date of account closure, rather than 6 years after the date the late payment(s) was recorded.
They stated in the two page letter (and I quote verbatim):
“I would like to reassure you any late payment markers will come off your Credit File six years after the date they were reported.”
Do you happen to know if there’s any way to verify this information from Virgin Money Customer Relations or if CRA reporting has changed recently? I appreciate it’s a minor quibble but could also be a key one for some.
Thank you.
Sara (Debt Camel) says
Nothing has changed in the CRA reporting so far as I know. I think what they said is just wrong.
Jade says
Hello,
I have a quick question on mortgage and credit file: I have zero debt but have bad marks on my credit file which in the main should clear by March 2020. However, I have a couple of late pay day loan payment history from 2014 – settled in 2017, that will be on my file next year I think and I have a default to BT of £81 that was lodged in 2016 which i have contested but they refused to clear. I want to get a mortgage next Spring/Summer, as think the credit file should update April /May. However I am using credit responsibly and credit file numbers are going up more or less. I wanted to know though, with regards to a Mortgage, what will be credit file do once the bad marks drop off? Will my score go up a lot (one mark is a CCJ, settled in 2016 for £900, one mark is a default settled in 2018 for £11k.) I will still have history of pay day loans and also this dratted default from BT. I have worked very hard to clear debt, tidy up credit file and save money after a bad period in my life seven years ago, which led to bad financial decisions. Am keen to understand optimum time for beginning mortgage search as soon as possible, and understanding impact on credit file in month or two after the big marks have dropped off in mortgage lenders view.
Sara (Debt Camel) says
The late payday loan payments – which lenders were these with and have you considered if you can make an affordability complaint against them? If you win one of these complaints, any negative information on your credit record for the loans being refunded if removed … See https://debtcamel.co.uk/payday-loan-refunds/
Abdul says
Hi Sara,
I have a query and hoping for some advice.
During a rough patch in my life I ended in huge amounts of debt,stopped paying all my creditors in Spring 2014 which lead to 5 defaults.
I’ve worked hard to clear these and all have been fully satisfied. I’m expecting 4 of these defaults to drop off this June.
Natwest originally defaulted my account in August 2015 but after a quick letter to them adjusted this to June 2014.
Bank of Scotland are refusing to adjust their default start date and currently set it as December 2014. I know its only an additional 6 months compared to the other defaults but my partner and I are looking to buy our first house and I would like to have a clean account prior to applying for a mortgage.
I’ve explained to BoS that their default should align to the other debts on file but have refused this as they are unable to comment on other creditors policies. Is there any advice you can give me regarding this? The debt is fully paid and settled.
Sara (Debt Camel) says
What sort of debt was this? When was it settled?
William says
Going forward for a mortgage with my girlfriend in the summer. She is a 999 Experian perfect person, amazing with money and 100% squeaky clean. I’ve got some defaults on my credit file and had payday laons as recently as 2017 and a “needs improvement” credit rating pretty much wherever I look. (Credit Karma, Experian, etc)
For want of a better expression, do they even each other out? We had to do a joint application if we want the property/ mortage value we need otherwise we’d jsut use her on there. Worth nothing neither of us has even a penny of debt right now and both earn very good salaries and have a 12.5 / 15% deposit.
I’m just worried I’ll be a problem :-(
Sara (Debt Camel) says
when were all your defaults paid off?
have you looked at affordability complaints about the payday loans? If you win one you may get some money back but equally importantly any negative marks on your credit record may be deleted and a few lenders just delete the whole loan.. .https://debtcamel.co.uk/payday-loan-refunds/