Here are some questions I have seen recently about how long it takes to improve your credit score for 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. And some of these have changed in 2020 because of Covid-19.
But this article has general guidelines to help you work out what will improve your situation.
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, not the score itself but what your credit history shows.
The three fundamental 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 all of the three big credit reference agencies. See The best free credit reports for how to do this.
If you only look at one, you may miss something bad on another one as not all lenders report to all of the CRAs.
It’s good to do this at least six months before a mortgage application so if you see any errors you have time to get them corrected.
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);
- the dates of any payday loans. Most high street lenders will not consider you for a mortgage if you have had a payday loan in the last two 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.
The rough rule of thumb pre-pandemic is that you could 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 had repaid all the defaults and any arrangement to pay debts more than a year ago.
But Covid-19 and then the cost of living crisis has made lenders more risk-averse. Many now want the defaults to have been settled for a couple of years – or even longer if you only have a 10% or 15% deposit.
Often better to repay debts first then save deposit
If you were going to repay your debts over the next three years and also save up the deposit during that time, you should think about a different plan.
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. That means when you apply for the mortgage, your debts will have been settled for longer. 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.
(The exception – this doesn’t apply if your old debt is “unenforceable” for some reason. This could be because it is Statute barred or because the creditor cannot produce the CCA agreement for the debt. Here the creditor can’t take you to court for a CCJ. If you aren’t sure about this, talk to National Debtline on 0808 808 4000 about it – they can help you understand if it applies to any of your old debts that aren’t on your credit record.)
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.
Consider whether you could win an affordability complaint about a debt with credit record problems – often this will get you not just a balance reduction/refund but your credit record problems will be cleaned as well.
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:
- aim to pay down credit card and catalogue 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 two years 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;
- don’t use Klarna and other buy now pay later lenders. They may impact a lender’s affordability calculations. .
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 – these cards can make your situation worse very fast if you don’t repay the balance in full every month.
- Look at LOQBOX – it helps your credit score whilst you save. That too will take at least 6 months before your score starts improving.
- Experian’s Boost promises it will only increase your credit score, not harm it. But the amounts are small and there is little evidence that mortgage lenders are impressed by this.
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
- Getting a mortgage with debts This looks at the wider problem, eg the affordability calculations.
- 95% mortgages You may need a very good credit record to get one.
- very long mortgages. A 35 or 40-year mortgage will reduce your monthly payments but think about the problems they often bring.
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.
Deborah McAteer says
I have a default on my account from November 2013 does that mean that coming this November it will drop off having passed the 6 years?
Sara (Debt Camel) says
yes, a default date of 14 November 2013 means it disappears 6 years later on 14 November 2019.
Deborah McAteer says
Thank you,
Thats great news!
A mortgage adviser said i should wait before settling the payment as it would appear like a brand new default on my file.
Thank you so much!
Sara (Debt Camel) says
It won’t. It will drop off if it is paid in full, paid partially or not paid at all.
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.
Micah says
Hi Sara,
I have two unsettled defaults both being paid monthly, but both drop off my file within the next 35 days. Totalling £500
I had a CCJ which dropped off in September.
I now only have 1 default for £97 which is paid and settled, this drops off in 2020.
I just wanted to check my mortgage chances at the end of October? Will that 1 remaining default ruin my chances even though it has been paid?
Thanks
Sara (Debt Camel) says
It’s not just your credit record that is a problem. An old paid default should be OK> but if you are still paying unsettled defaults (and is the CCJ settled?) then that will show on your bank statements and may cause a problem. You want all your defaulted debts settled, on you credit record or not.
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.
Lewis says
I have had a default from 2016 pop up on my credit file, the lender has agreed to take it off a few days ago but its had not yet been removed, the problem is i have a mortgage broker waiting to put through the application for the mortgage but i need it to go to do so,
How long you think it takes to be removed as the lender said within 24 hours and it has now been over 48?
Sara (Debt Camel) says
if it is going through the normal procedure, sometime in the next month.
Lewis says
Ive just signed upto a few credit score sites and it has been removed, and my scores gone upto excellent! So good news, i think it was the site i was using may take a few weeks to update
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/
Mr Frab says
Hi Sara,
Can you please amend the above to show that Noddle has been replaced by Credit Karma?
Sara (Debt Camel) says
ok!
Ingrida says
Hi Sarah, we would like to finally get on the property ladder.
We have a good income, and 10% deposit.
Problem is our credit scores. They are both fair.
My husband has a debt of 8000 (various lenders), they will be 4 years old next year in summer. Only defaults, no CCJ.
We plan applying for a mortgage at the end of next year.
We are paying off the debts, and it will be paid off hopefully this year.
Do we stand a chance for a mortgage even with settled defaults, they will not drop for another 2 years. Its a unsecured loan, store cards, credit card and overdraft.
Mine will be dropping off this year, so should be fine.
Thank you!
Sara (Debt Camel) says
yes you stand a chance, or rather you would have a few months ago. It’s hard to guess what the mortgage market will look like in 18 months, but the sooner those defaults are repaid the better. Definitely go through a mortgage broker.
M says
Hello,
I would like to gain advice to help improve my future, because of my irresponsible past. I was a student up until September 2019. I have been in employment since then and had a regular income, therefore I was able to make regular payments.
Due to being an unemployed student, I was silly with money and got into debt with The Shop Direct group. The file ended up as a default on my credit score however was settled. The date of the default is the 13th March 2019, so it has been on my file for 1 year now. I currently have no debt in my name and a credit card with no spending on it. My score on Experian is currently 505, very poor.
My question is, my partner and I are currently saving for a mortgage. I understand with a default it will be extremely challenging. However, I am looking for ways to improve my credit score as much as I possibly can. We are in rush to move out at the moment, however we would like to be out by 2022.
What next steps can I do to make constant improvements to my file and score?
Also, what will be the likely hood of me gaining future credit (short term, within the next year, e.g. phone bill, car finance)?
Will I have to wait another 5 years before applying for a mortgage, or are their brokers which specialise in adverse credit?
Thank you in advance.
M.
Sara (Debt Camel) says
I hope this defaulted debt has been repaid? If not, this needs to be your top priority. the longer ago the default was settled, the less bad it looks.
What next steps can I do to make constant improvements to my file and score?
A good first step would be to start making some regular monthly savings through LOQBOX. See https://www.loqbox.com/en_gb/. That structures your savings as though they are a loan, so it looks on your credit record as though you have taken out credit and repaid it on time. But it costs you nothing, you won’t be credit checked and you get all your money back at the end.
I don’t think you will have difficulty getting a phone contract.
But car finance may well be at a high interest rate. This can be very bad news for your finances and chances of getting a mortgage as all payments you are making affect the mortgage affordability calculations. Can I suggest you look instead at the option of buying a second hand car? go for a reliable make. There may be a lot of bargains around in the second hand car market soon… even if this means you have to use some of your savings, it will save you a lot of interest and you won’t be making monthly payments, so your savings build up quickly AND to a mortgage lender you like a better prospect without the monthly outgoings.
With only one default, more than 3 years old and repaid more than a year before, you may well be able to get a mortgage at an OK rate from a high street lender. Mortgage lender don’t actually care about your credit score as such, they are interested in the problems you have had. When you have a good deposit saved up, you need 10%, talk to a normal mortgage broker about your chances.
Bad credit mortgage lenders are best avoided. I have seen too many people who took one out expecting to be able to remortgage at a better rate in a couple of years, but that wasn’t possible so they were stuck. Some people in 2008/2009 saw the mortgage rates on their bad credit loans being increased, even though normal lenders were dropping their interest rates :(
M says
Hi Sara,
Thank you so much for your guidance.
The default was settled and paid in full a few months after.
I am putting away £700 monthly.
Thank you for your guidance,
I will be in touch when I’m actually in a position to start the next steps with a mortgage.
Stay safe in this uncertain time.
Thanks again.
Sara (Debt Camel) says
Good plan – but don’t get in touch here – talk to a mortgage broker! Good luck.
JK says
Sara, me and my girlfriend are looking to buy our first home together, her credit is very good however mine is poor.
I have 6 defaults dated between 1/2 year old (all of which are satisfied) and now have no outstanding debts.
We are currently living at her parents, both are in full time employment. I earn around 32k/ year and she earns 22k/ year. We will have around 15% deposit the house we want is 150k.
The defaults i had were loans and a credit card.
I have no car finance/ commitments apart from my phone bill. She has a car she pays for. What are our chances/ what should we expect as we are going to speak to an advisor this week. Thankyou
Sara (Debt Camel) says
Those are pretty recent defaults. You will have to wait and see what the adviser says.
Darrell says
How did you get on as I am in a similar position? Thanks
Cath says
Hi there, between the ages of 18 – 22 I was pretty bad with money, I have a CCJ and 3 defaults on my report. I am now 24 and have satisfied the CCJ and paid all defaulted accounts. I know that this information will stay on my file for 6 years from the defaulted date but was hoping you could tell me if there is anything else I can do to help improve my score. I am now in a position where I have a steady income, no debt, some savings and would like to get a mortgage. I have a credit card which I use and pay regularly and am on the electoral roll. Is it now just a waiting game?
Sara (Debt Camel) says
It is mostly a waiting game. A credit card which you pay off every month is the best thing to help your credit record. How long ago was the CCJ?
James says
Hi Sara,
You have prob answered this but i can’t see it, i am hoping in 3 years between getting pay day loans off my credit file and also old mobile phone and credit cards coming off my credit file i was hoping to get a mortgage, i noticed in part of your information above it says that debt not paid even though it dropped of your credit file will still be taken into account by a mortgage company.
Is this true? Do you need to clear the debt before you will be considered for a mortgage even though it is no longer on your credit file. Is this the case?
Sara (Debt Camel) says
Yes it is true. A lender will see payments you are making to old debts not on your credit record from your bank statements.
A good option maybe to look at making partial settlement offers to these debts?
James says
My plan, although this might not be the most ethical thing would be to not pay them at all once they drop off.
I know you prob would not recommend this but for me if it is away, that’s it done for me. So if i don’t pay it and it is over 6 years then there is no way they can look at historic debt?
Sara (Debt Camel) says
Bad plan. At least some of them are likely to take you to court for a CCJ when you stop paying. the CCJ would be added to your credit record and thats any chance of a mortgage gone for another 6 years.
James says
Most are near the end of the 6 years, so i was thinking if i do get in touch and arrange to pay them it starts the 6 years all over again? When there is the chance that they might not get a CCJ or a decree as it is called in Scotland.
Most of the debts are with Lowell, i am not sure how likely they are to take me to court, i don’t know if you have had any dealings with them?
Sara (Debt Camel) says
You have been making payments to these debts so there is NO chance that they will be statute barred. every month you make a payment restarts the 6 year limitations clock (that maybe 5 years if you are in Scotland, but the point remains that these debts are not going to be statute barred any time soon.)
Essentially the “6 year point” has no meaning here. A firm is just as likely to take you to court if you stop paying after 6 years and 6 months as if you stop paying after 4 years and 6 months.
For some of the debts the creditor may be unable to produce the CCA agreement, see https://debtcamel.co.uk/ask-cca-agreement-for-debt/.
James says
Hi Sara,
Thanks for your reply, i have actually not acknowledge or paid anything to these debts in years, does this change anything.
Sara (Debt Camel) says
ok, you wrote that your plan “would be to not pay them at all once they drop off” which I read as meaning that you were currently paying them.
I suggest you read https://debtcamel.co.uk/no-calls-or-letters-about-debt/
DD says
Hi Sara
I have an offer to buy my house for 30k
It is worth 120k on the open market
I have been given the discount as my parents have been living in the house and paying rent from 1956
I have always lived in the house and took over the tenancy when my parents died in 2001
I am looking to get a mortgage as a first time buyer but my experian credit score is 551 due to my 90% utilisation on my credit card and not being on the electoral register.
I will be on the electoral register from 01/09/20
and have paid down my card to 10% this month
My limit on card is 5k
The problem is that I have to have a mortgage in place by 31st August or the discount offer will not be available
I do not pay any interest on the credit card as i have only had it 16 months
Do i have any mortgage options as i know it takes time for my credit rating to go up and thats what worries me
I can put down 3k of the 30k asking price as a deposit and have a clean payment record on my credit over the past 7 years
Sara (Debt Camel) says
Are you saying you want a mortgage offer in two weeks or you need to have completed the purchase in two weeks?
who are you buying from?
I suggest you need to talk to a good broker fast.
Nicola says
Hi Sara,
I have an interest only mortgage on the house I live in. I have seen another house which I want to buy and get a repayment mortgage on. Will the fact that I have not paid any capital on my current property work against me getting a mortgage (I won’t being selling my current property until the mortgage comes to an end in a couple of years)?
Thanks
Sara (Debt Camel) says
Do you have a big enough deposit? Which house do you intend to live in and are you planning to let the other one out?
Nicola says
Hi Sara,
I have a 10% deposit deposit and I want to move into the new one ( I also have the land transaction tax for 2nd home). I will let the other out for now, mortgage currently 320 and could let for 650.
Regards
Sara (Debt Camel) says
a) there are VERY few 10% mortgages on the market. You may struggle.
b) you will need to get the permission of your current mortgage lender to let out the house.
Why not make your life simple and sell the current house? That should give you a much bigger deposit.
Nicola says
Hi Sara
Thanks. Normally I would sell but I don’t want miss to this house.
Matt says
Hi
I have a £1400 overdraft which don’t use
anymore Should I keep it , reduce or bin it ? In regards to applying for a mortgage
Thanks
Sara (Debt Camel) says
Is the rest of your credit record fine? When did you last use the overdraft, I mean not for the odd £50 for a few days.
Matt says
Yes credit report is good.
Been maxing out my overdraft for years but from this month using my own money ( at last )
Would it be best to keep it as long as I don’t use?
Sara (Debt Camel) says
It isn’t a problem if you aren’t using it.
If you want to make a mortgage application immediately, talk to a good broker about the fact you have only recently stopped using it.
JB says
Hi Sara,
My Experian credit score is 664 (poor), and 296 on ClearScore. I have a satisfied CCJ from May 2019 (following a dispute over a private parking ticket) which only shows on Experian, not clearscore. I have 2 credit cards – one with a £5200 limit using £3800, which I pay £350 off of monthly and don’t spend anything on (it was a £6000 limit and maxed out with £2.2k paid off this year) and another which is a credit builder with a limit of £200 which I pay off in full whenever I use it. I have managed to slowly improved my credit score over the last 6 months, and hope to continue doing this.
However, I am looking to get a mortgage with my partner around April/May 2021 for a help to buy property (5% our deposit, 20% government deposit). He has an excellent credit score and credit history. What do you think my chances are of being accepted or given a good interest rate? (My credit card will have approx £1600 left on it by the time we apply).
Sara (Debt Camel) says
So the problem is the CCJ. It is a shame you did not pay it within 30 days of losing the case, then it would have been deleted, but now it will remain there until May 2025.
The Help To Buy is a very specialist lender market, I can’t guess how easy it will be to get a HTB mortgage with a satisfied CCJ on your record.
Costal queen says
Hi
love your site my question is not about defaults but about late payments. I have no defaults but accounts that show late payment about 5 years ago I had 2 late payments. The accounts have long since been settled and closed my question is are these lkely to also drop off at the 6 year mark and are they likely to be impacting my score
Thanks
Sara (Debt Camel) says
That will drop off 6 years after the settlement date.
momo says
I have 2 defaults from taking 2 years unpaid Mat leave; HSBC Credit card £4500 from Oct 2015 and NatWest Credit Card £590 from Sept 2016 I just couldn’t keep up with the minimum payments after a while. I’ve recently learned that both debts have been passed back from DCA; HSBC Dec 2018 and NW Feb 2019 and so are back with the original creditors.
I received no correspondence regarding the debt and hsbc didn’t chase for it. I moved last year didn’t update NW with forwarding address as lot going on. Credit limit of £450 reduced by NW to £375 and charged me penalties etc. taking defaulted amount to £590.
I’ve recently made contact with both creditors in an attempt to pay the debt and finally settle the accounts but I feel like I’m fighting a losing battle! It’s as if they don’t want the money back! My current credit score is ‘Poor’ and my hubby and I really want to get a mortgage early next year but both have defaults and he has 4 CCJ’s mainly from parking fines sent to a wrong address, he was not able to dispute them. This sounds hopeless!
I really need some advise on how to get these debts paid. Any advice would be much appreciated!
Sara (Debt Camel) says
Are you saying neither NatWest nor HSBC want you to pay the debtS? Why not?
Re a Mortgage, unlEss you have a VERY large deposit, one next year sounds very unlikely. Your husband should have challenged the CCJs when he found out about them. Tell him to phone National Debtline on 0808 808 4000 and see if it us too late to get them removed.
momo says
Thank you for the advice, he is looking in to this since he found out. I’ve been gifted a property mortgage free but am having great difficulty getting a mortgage for it. My mortgage broker has advised its the defaults and to give it some time when the market picks up I may have more options.
Hsbc don’t seem eager to recoup the debt, they have not threatened court action, neither has NW. I find it quite bizarre they are not pushing for the payment, they seem more keen to get me on a payment plan – will this reset the clock?
Sara (Debt Camel) says
Sensible advice from your mortgage broker.
Why do you want a mortgage?
Just say you want to pay it all now, I can’t imagine why they would refuse.
momo says
Its a bit complicated Sara.
I want to remortgage to help pay for my dad’s care, move him in with us in a bigger place and use as deposit for future house. I can’t afford to pay defaults in full as on furlough so a partial settlement is best i can do to clear these now. I’m going to write to the creditors to offer them a partial settlement as not getting anywhere on the phones – do you have a good template letter you can reccomend?
Sara (Debt Camel) says
You are trying to get a mortgage when you are on furlough with a poor credit record and your partner has a worse one. This just isn’t likely.
I can understand wanting to borrow money to do the place up if your dad needs adaptations, but you don’t need to borrow to get a deposit for a mortgage on somewhere bigger, you just sell the house to get that.
It can be hard to get a lender to accept a partial settlement.
momo says
Yes I know it must sound crazy and far fetched! People shouldn’t give up on their dreams because they lose their job or income plummets. Lessons have been learned and fortunes turn around.
Thank you for your feedback Sara.
Dom says
My partner and I are looking to buy, but I’m worried we won’t be able to because of my situation.
We either wanted to buy an older house or access the first time buyer scheme (Ending March 2021??).
We would have a £20k deposit and have spoken informally to a broker.
My issue is past credit. I had a CCJ for about £150 that was cleared a couple of years ago.
I have 2 defaults. One an old credit card with payment plan in place for a 2 years and another for a Utility, no payment plan.
Defaults:
Old Credit Card – £2394
Paying £25 per month.
Utility from prev. address – £1385.19
Paying £0 per month.
Finance:
Car, taken out July this year.
Car £11,315 – Total finance
Paying £195 per month.
Credit:
3 credit cards, taken out over 6 months ago, with high utilisation:
1. Used £2,303 – £2,350 limit
2. Used £199 – £200 limit
3. Used £303 – £400 limit
My Clearscore CS has increased to 374 showing no missed payments since Oct 2015.
I earn £25k basic with commission on top (about £2.5k due to COVID), I have been with the business for over a year and have no savings.
My partner has been with her business for over a year and will be going full time on £23k, giving us a combined income of minimum £48k, with potential to earn more, her credit score is 470ish.
Am I in a position, where a broker is gonna say we can’t get a mortgage because of my circumstances, or is there some hope? If so, how soon could we apply?
Sara (Debt Camel) says
I don’t think you have much hope at all with a CCJ, unpaid defaults and very high credit card limits. Don’t even think about a “bad credit mortgage” – don’t believe any broker who says you will be able to remortgage onto a good rate in two years.
If you two want a house, you need to settle down and start clearing out the problems. Do not buy anything at all on credit – if you can’t afford it, save up for it. Plan to keep the car when the finance ends, not get another one on finance.
If your partner is going to get a pay increase and can get more through overtime or bonuses, use this money sensibly. You may be able to get settlement offers on the defaulted debts, if not they have to be paid in full and as soon as possible. Clear those credit card balances. then close the 2 cards with tiny limits – they don’t help your credit score at all.
Julia says
Hi Sara,
I have just had an offer accepted on a house and have a 15% deposit ready to go. I have a salary of 28k and my mortgage broker has done an affordability assessment and is happy that the mortgage I’ve applied for is affordable.
My concern is that when I checked my credit scores I noticed that experian had dropped to fair (due to a hard credit search performed when I opened a joint account last month with my partner for paying bills on our rental). My clear score is ‘poor’ (345) which came as a shock and I think is because it doesn’t have me registered on the electoral roll (which I am and I have raised a dispute). I have no debts, no CCJs and no defaults & pay everything on time. I think the only reason I’ve not got a higher score is because I’ve not really taken out any credit before (no loans or credit cards).
My partner is not applying for the mortgage with me as he is a 0 hour worker which can discount a lot of mortgages. However his credit score is excellent across all CRAs.
Am I completely irrational for worrying about whether I will be able to get a mortgage at a decent rate with this?
I didn’t know whether it was worth telling my mortgage broker now as the application has already been submitted!
Thanks!
Sara (Debt Camel) says
One hard search does not have much impact. Neither does not being on the electoral roll. The problem is very likely that you have no loans or credit cards in payment.
Can you get through the affordability calculations on your income alone?
Julia says
My broker did a basic affordability assessment of my income alone for the mortgage I’m requesting and said that he didn’t have any concerns regarding that as my outgoings are not particularly high. Even though all of the household bills will be split with my partner (so my actual outgoings are less), I would currently be able to afford them on my own if I had to on my monthly income with income to spare.
Sara (Debt Camel) says
OK< well tell your broker about your concerns, but the level of someone's credit score is less important than what the lender thinks of your credit history. Hopefully, your broker will have chosen a lender who will be happy with yours.
Rachael says
Hi there, I really hope you can help. I got into some financial difficulties in 2016/2017 and defaulted on a capital one card totalling £1200 in feb 2017 and on a credit union loan of £300 in 2016. Both were paid off in full in 2019 and I have had zero late payments/problems in the last 4 years, with me paying off my credit card each month and having no other outstanding debt. My partner has excellent credit rating and we have a 10% deposit toward a small mortgage. I want to apply through a broker but I’m nervous with the current climate this would be pointless given my credit history and worry I’ll be directed towards a bad credit mortgage which I want to avoid. What would your advice be?
Sara (Debt Camel) says
You would pass what was the old rule of thumb pre-pandemic – all your defaults are more than 3 years old and they have all been paid for over a year.
But now this may still be a problem. And it’s not that easy to get a 10% mortgage with a spotless credit record.
There is no harm in talking to a broker and seeing what they say. But a bad credit mortgage is something to be avoided.
Emma Cowley says
Hi Sara,
I’ve tried to applie for a mortgage with my partner but ive been kocked back because I have to defualts nearly 5 years ago and is their anything I can do so I can get a mortgage sooner.
Sara (Debt Camel) says
Are the defaults now repaid? When?
Amy says
Hi – me and my partner are looking at getting a mortgage on our first home together hopefully this year. He has a really good credit score, no previous debts etc. However, my score is poor (354 on clearscore) – I had a DMP which was paid off in Jan 2020. This included payments for payday loans and bank loan/overdraft. I have two defaults for the bank loan/overdraft with the same bank (which I no longer use). The default date is showing sep 2018. Last payday loan was taken out in July 2017. Like I said all this has been paid off. I’m now using a credit card with a low limit and paying it off in full each month to try and increase my score. Other than that I have no other credit/loans/overdrafts etc.
I have recently come into money so now we have a combined deposit of £48k at present, ideally looking for a house between £130-£150k. We have a joint yearly income of £34k, minimal outgoings. Realistically would we be able to get a mortgage any time soon and with a decent rate? Would it be better to consult a bad credit broker/specialist broker?
Sara (Debt Camel) says
So all the defaulted debts and any others in the DMP have been repaid for more than a year now.
And your last default date is just over 2 years ago.
BUT you have a very good deposit and the mortgage will be a lowish multiple of your earnings.
You could talk a mortgage broker now. They may say wait until September when the last default date is 3 years ago.
Vicki says
Such helpful advice here. My question is, is there a point where deposit size means lenders are not too bothered about credit score?
My partner and I own outright a property that would represent a 60% deposit (after CGT) on moving to a larger place but I’ve just discovered he has £5,500 outstanding debt (HMRC, utilities) dating from 2013/14 but passed to 2 separate collections agencies in the last 6-12 months. We will pay them off right now but clearly his credit score is busted. Though once fully satisfied will they quickly drop off given the original debt was from 2013-14?
The 40% LTV we’d require would be 3-4x my salary (he is a stay at home dad) but I understand any mortgage application would need to be joint and would focus on the lowest credit rating.
Sara (Debt Camel) says
will they quickly drop off given the original debt was from 2013-14?
look at his credit records with all three credit reference agencies. What are the default dates on his records? They may not be what he remembers as the point he defaulted…
Vicki says
The (2013-14) dates I’m quoting are the period the original bills relate to, as set out in debt collection letters- but for the utilities bills they were only passed to debt collection in november 2020. So is it 6 years from 2014 or from 2020 or from their payment this month that matters?
Sara (Debt Camel) says
what matters is the default dates that are recorded on the credit records – you need to look at the details: https://debtcamel.co.uk/best-way-to-check-credit-score/
Andy says
Hi
I hope you’re keeping safe and well?
I wonder if you can help here?
I currently have a credit rating of excellent across all main agencies.
That hasn’t always been the case.
About 2 years ago I paid off the last of the debts a former partner ran up on my account.
They also came off my file around 2 years ago.
Since then I’ve been improving my score and have low commitments and little borrowing on a credit card. Around £1200 interest free and paying £120 a month.
No defaults or anything on my file in last 2 years.
Am I in a good position to gain a mortgage?
Thanks in advance
Andy
Weatherman says
Hi Andy
If the defaults were more than six years ago, which it sounds like they were, they won’t show on your file anymore. So your credit report looks in good shape for an application.
Your chances also depend on the % of the sale price you’d have as deposit, and how many times your income the amount you want to borrow is (as I’m sure you know!). But the credit report side of things seems good.
Andy says
Thank you so much.
It’s been a struggle for a few years to repair things. But hopefully all worth it!
I appreciate your reply.
Andy
Jane says
Hi, I will hopefully be getting £40,000 from an inheritance in August. I would like to put £30.000 as a deposit on a mortgage. Using the rest to pay off debts of approx £5,500. However I have 2 CCJs one from 2016 (paid) and one from Jan 2021 (£546 to pay). 4 defaults: 1 from a credit card from 2017; 1 from 2019, 2 from 2020 one being from PRAC. My question is which should I pay off first? Should I offer a full and final offer?. Should I apply for a CCJ Certificate of Satisfaction? What is my chance of getting a mortgage after all debts cleared? And what time frame?
Weatherman says
Hi Jane
First things first, you need some proper debt advice! Call National Debtline on: 0808 808 4000
I hope the information below also helps, but National Debtline can go through your circumstances much more.
Any default or CCJ in about the last 3 years – paid off or not – will quite badly hit your chances of getting a mortgage. Having several as you do makes it even harder. Paying off defaults won’t change your credit score, but might make a lender slightly more likely to lend to you.
You might be able to speak to a broker specialising in bad credit, but even if they can help you’ll get a higher interest rate and might be able to borrow less.
That hit reduces after 3 years or so, and after 6 years each marker drops off your credit report altogether. So assuming there are no new defaults or CCJs, your chances will be higher from about January 2024 and your credit report will be fully ‘repaired’ in January 2027.
If you can repay the most recent CCJ within 30 days of it having been made, it will be off your credit report, so those dates would be a bit sooner – 3 or 6 years from your last 2020 default.
You don’t really need a Certificate of Satisfaction for a repaid CCJ.
Weatherman says
There’s no simple answer about whether to repay CCJs or defaults first – if you don’t repay CCJs, you risk visits from bailiffs, an application for direct payments to be made from your earnings, or even your creditors applying to make you bankrupt if your debts are over £5,000. If you don’t repay defaults, you risk getting an extra CCJ, which will stay for a further six years.
There’s also no simple answer for which of your defaults to pay first. It depends on lots of things, including how likely you think the creditor is to apply for a CCJ.
Sara (Debt Camel) says
Are you asking which you should pay off first in August? Or do you have some money now that you could use, if so how much?
DebtFreeDaddy says
I’ve been on a DMP with StepChange since Dec 2018. I have just managed to negotiate (myself) to make F&F settlements on all of my debts, so I’m now 100% debt free. Apart from my car, which I’ve never made a late payment/missed a payment on.
My credit file is showing lots of “Missed Payments”, but the creditor has recieved payments every month from StepChange. Should I contest this and ask for a correction? I’ve neven missed a payment to StepChange an they’ve paid the creditors every month.
Sara (Debt Camel) says
all your credit records are now showing as settled with zero owing? Were any of them defaulted or just lots of payment arrangements?
United2017 says
Hi
I’ve got 4 defaults and a CCJ on my credit file. The 4 defaults I’ve no idea what they are for. One seems to be BT, one seems to be a mobile phone and the other two are gas and electricity??
I’ve had a call with a credit repair company who say she can get all the defaults removed for £200 each. I’m obviously suspicious and wondered if there is anyway of challenging the defaults and potentially getting them removed on my own.
My Credit score is below average but not too far away from being good. Any quick wins and links to known processes that work such as letter templates etc would be much appreciated. Thanks
Sara (Debt Camel) says
a credit repair company
Can you say who this company is?
Scott says
Hi Sara,
Me and my partner are currently trying to get a mortgage but are having issues, my salary is £63000 and hers is £40000. We both live in london and my credit score is above average and hers is excellent but when recently doing a credit check on clear score, I have came across a default from 2015 of £2000 from a company called Arrow Global. I was living in Australia from 2015 and have been now back in london for 2 years now with full time employment. I’m now trying to get in contact now to clear this off as I’m not sure what it is from but even if I pay this does it now mean I have to wait another year before applying for a mortgage even though we have a 12% deposit ready now ?
I am also worried that this is a CCJ but not completely sure if it is, How do you find out if it is or not ?
Regards
scott
Weatherman says
Hi Scott
A CCJ would show as a CCJ – so this is just a default.
A single 5+ year old default, particularly if it’s been paid, shouldn’t particularly hurt your chances of getting a mortgage. After 6 years it vanishes (so it depends on which month in 2015 it was registered exactly when that would be).
Best of luck, although I doubt you’ll need it!
Scott says
Hi Weatherman,
I have only recently paid it as I didn’t know it existed but have asked arrow global to remove the default if possible as I had no correspondence of it existing. I have paid it in full and the default will come off on July this year as that is then 6years if arrow global decide not to remove it. If I’ve only paid it now does that mean I need to wait a year
Weatherman says
Hi Scott
To be honest, paying the default only makes a slight improvement to your credit report – what really does the damage is the ‘evidence of a missed payment’ that any default represents. (It’s still good to do – it stops the creditor getting a CCJ, for example)
It’s the date of the default marker, not the date of the payment, that matters. And because the date of the default is 5 years ago, I think you’re likely to be fine to get a mortgage even if Arrow won’t remove the default. Or you could wait until July when the default will disappear. No need to wait a whole year!
Sara (Debt Camel) says
Unfortunately a lot of lenders are fussy about the settlement date. They like to see that all the problems happened a long while ago (the date of the default) and also that you have recovered and been problem free (all debts repaid more than a year ago with no further problems.
If you have a huge deposit there may be lenders that will be less fussy – go through a good broker who can argue the case you paid the default as soon as you found out about it.
But if the default date was in 2015, then is drops off this year as Weatherman says – what month in 2015?
I would definitely want to find out what this debt was and whether you agreed you owed it before paying it. And there may be some other options depending on what sort of debt it was.
Peter says
Hi
I am looking to get a mortgage later this year if possible.
I have paid off all my debts with the exception of my credit card which has a balance of £900 out of a limit of £1000.
I have 2 defaults that have been paid back and are 4 years old. I also have pay day loans on my file (33) they have all been paid and are all between 4 and 5 years old.
My Experian score is around 615 and ClearScore 330.
Would I be able to get a mortgage? And what deposit would I need approximately?
Thanks
Sara (Debt Camel) says
When were the defaults repaid?
Who were the payday loan lenders and were there any defaults on them?
Peter says
Around a year ago
No the defaults weren’t on the pay day loans.
And the loans were with My Jar x 1, Elevate and wfdc make up the rest.
Thanks
Peter
Sara (Debt Camel) says
A common “rule of thumb” for mortgages is that the defaults have to be over 3 years old and have been repaid for more than a year for a hiugh street lender to not reject. It sounds as though you will pass this test later in the year.
A few old non defaulted payday loans don’t matter that much. I don’t know if a lender would care that you have had a LOT. It seems worth trying to get some of them removed.
If the Myjar loan was large, send the adminstrators an email (see https://www.myjar.com/) and say you want to make an affordability complaint – if you win this you may get a very tiny amount back but there is a chance the administrators will just delete the loan from your credit record – they may not as it was paid on time. It’s worth a try. But you have to make an affordability complaint, not just ask for the loan to be deleted.
Elevate (Sunny) – read https://debtcamel.co.uk/correct-credit-records-lender-administration/ and email the credit reference agencies the Elevat loans show and say the credit records are incorrect but the administrators just say to contact the CRAs, so you would like the CRA to suppress these records.
WDFC (Wonga) – same thing except here you say the company no longer exists so you can’t ask them to correct your credit records, so you would like the CRA to suppress these records.
If the CRA asks why the records are incorrect, it is because the loans were unaffordable but you weren’t aware you could have complained (assuming this is correct of course).
Sara (Debt Camel) says
So if you apply later this year, all the defaults are over 3 years old AND have all been settled for more then a year – that helps.
You must go through a mortgage broker not direct to a high street bank. Go to a mainstream broker such as Habito or london & Country, not a bad credit broker.
As the payday loans are all so old they may be OK but it seems worth trying to get a few removed as there are so many.
Read https://debtcamel.co.uk/correct-credit-records-lender-administration/ and think about asking the credit reference agencies to suppress the Elevate (Sunny) and WDFC (Wonga) loans.
There is still time to send myjar an affordability complaint see https://www.myjar.com/. If you win you will only get a tiny amount of cash, but there is a chance the administrators will simply delete the loan on the CRAs. They may not as there was no default, but its worth a try.
Chris C says
Great article – looking for a bit of advice as mortgage hunting and don’t have a whopping 30k for a deposit so looking to use a 95% mortgage.
Pretty clean file some bumps along the way but they are on their way to dropping off. I had an issue with 02 in 2019 when after several bad incidents with 02 I decided to terminate my contract. The advisor on the phone told me one thing but then when they wrote to me another thing. I complained about this to 02 then to the Ombudsman. Long story short, I then had 4 late payments added to my file whilst my complaint was being investigated. I have tried to appeal with the Ombudsman and take it up with the CEO’s office because this status 4 really was unfairly loaded. My question is, can I take them to small claims court or have another means of disputing this entry?
Weatherman says
Hi Chris
What was the ombudsman decision in your first case, and when you complained about the late payments being added?
You can still take a company to court if you’re not happy with the outcome of the ombudsman case, but the court is likely to be heavily influenced by the ombudsman’s decision. I have to admit I’m not sure what your route would be – you’d need to speak to someone with a legal background. CItizens Advice might be able to help point you in the right direction.
Peter says
Thanks very much for all this information. I will contact then and start on this. Thanks again.
Peter
Amanda says
hey sara, so im now wanting to ask a couple of things. ive 2 loans.. one debt consolidation loan, half paid but 2 yrs left and the credit union loan with savings attached. spoke to a mortgage adviser about my past and current situation and shes happy i could go for a mortgage, that i need to make sure my bankstatements look good for next 4 months and then go for it.. however, i am going to make a small extra payment each month to my debt consolidation loan whilst im saving my deposit.. but do u think i should use my savings in credit union to pay off part of credit unions loan to reduce outstanding.
Sara (Debt Camel) says
are you allowed to use your CU savings for that? Sometimes CU loans have odd terms.
Amanda says
think i can but would mean i would be treated as a new member if i was to go for a loan again. it wouldnt clear loan but was thinking might look better with lower debt?
Sara (Debt Camel) says
Lower debt probably will look better, but how much lower? if it’s just a few hundred it may not make much difference.
Amanda says
well the savings would pay off roughly 1/3 of the loan. maybe phone credit union and ask mortgage advisor? dont wana mess status of account but then if helps to get a mortgage then good option?
Sara (Debt Camel) says
Talking to your mortgage adviser sounds like a good move to me.
Rachael says
Hi there, I really wanted to leave an update for this to give hope to anyone in a simmilar situation. I took your advice and contacted a broker who was brilliant and placed my partner, who has the excellent credit rating as applicant number 1 and myself as applicant number 2, this gave a heavier weighting to him rather than myself and we’ve just had a full mortgage offer from a high street bank with a 90% mortgage :) A broker is definitely the route for anyone with a complicated credit history so thank you for the advice!
Nick says
Lenders are definitely more cautious now. I had an old default from almost 6 years ago that was due to disappear in a couple of weeks, with an otherwise perfect record, and earlier this month a recommended broker told me they couldn’t get me a mortgage. Once the default had dropped off my file, my credit score went immediately from Bad to Excellent and I can now get a £700K mortgage loan from anyone. I was also given a credit card with a £12K limit. It is ridiculous that 2 weeks makes such a difference. NB for anyone in a similar situation, beware of applying for a credit card from a company owned by a bank with which you had a satisfied default. E.g. M&S Bank is owned by HSBC so if you have a now invisible satisfied default with HSBC then even if a soft search with M&S shows you will be approved you will still be rejected on a hard search.
Louise says
Hi
Just looking for a bit of advice me and my partner are hoping to get a mortgage maybe end of next year.
My credit score on check my file is fair at 607 however I have a fair few defaults from being a single mam at uni going through a divorce and things just got tough me and my partner are working on paying off the defaults none are under 3 year old…if these are paid what are the chances of being approved? Is it worth paying the defaults? My part has a “thin” credit file also so it might just be me applying for the mortgage. I now have a very well paid secure job as a midwife.
Any advice would be very greatly appreciated thanks
Sara (Debt Camel) says
You have a much better chance of a mortgage at an ok rate if the defaults are settled, in full or with partial settlements.
Why does your partner have a thin file? Why can’t he get this sorted in the next 6 months?
Sami says
Hi Sara,
Firstly, your website has been incredible useful so thank you!
I currently have 2 defaults on my credit score and have outlined the facts as concisely as possible below:
Default 1 (Link Financial Outsourcing Limited):
– First registered on 1st Jan 2021 (initially Equifax and Experian and then monthly to all 3 agencies)
– Total value is £303
– The original debt was an overdraft to the Co-Op Bank current account
– The debt was in arrears long before 1st January 2021, probably in early – mid 2020, or earlier. I cannot check for sure as my Co-Op account has now been closed.
Based on what I have read on your forum, do you think I may be able to get the default removed completeIy removed as I never received a “Notice of Default” letter? Alternatively, could I try and get it registered to an earlier date as I strongly believe that I was in arrears for longer than 6 months before it was first registered on the 1st January 2021? Who should I write to, the debt collector, Co-Op Bank or Financial Ombudsman?
Default 2 (Thames Water):
– This is a default which I received regarding a water bill at an address that I had vacated over a year prior to period in question in the bill
– It is clearly wrongly sent to me
– First registered to Equifax on March 2021 (after 3 months in arrears)
– Should I write directly to Thames Water first or the Financial Ombudsman?
Thank you very much for your help,
Sami
Sara (Debt Camel) says
do you think I may be able to get the default removed completely removed as I never received a “Notice of Default” letter?
No. You didn’t read that from me!
A Notice 0f Default letter has NOTHING to do with your credit record. A lender does not have to send one befor adding a default to your credit record.
If you want the Co-op overdraft moved earlier, you need to ask co-op, not Link. BUT read https://debtcamel.co.uk/debt-default-date/ – as that says overdrafts are complicated and the 3-6 month rule doesnt really apply as how can the bank tell when the clock starts on this? Plenty of people don’t use a bank account for 6 months and would be very upset if they find the lender has added a default.
So unless you told the Co-op you couldn’t afford to pay anything, how do they know you were in trouble?
The water bill – did you tell Thames Water you were moving? I suggest you contact them with evidence of when you moved out and ask them to remove the debt from your name.
Calum says
Hi Sara, I’m looking for a bit advice. I have two settled defaults on my file from December 2016 and November 2017. I’m below 25% credit usage on my only credit card but I do have a PCP loan from Black Horse which I entered into in July this year.
My partner and I are looking to apply for mortgage in the near future through a broker. Her credit rating is excellent and her only debt is a car loan, no credit cards etc.
At the start of the process, I was completely undecided as to whether progress to viewing homes or hold-off until my defaults fall off. I’ve decided to press ahead as I’m 31 now and I have a 2 y.o. who’ll be starting nursery soon.
It’s hard to think that a few years of bad choices may push me back until I’m in my mid thirties.
What would your advice be?
Thanks!
Sara (Debt Camel) says
how long ago were these defaults settled?
Calum says
Hi!
They were both settled on the 30th April 2018.
Sara (Debt Camel) says
Then if your credit record is clean of problems since 2018, I think you may well be ok for a mortgage from a high street lender if you pass the deposit and affordability checks. Talk to a good broker.
Calum says
Thanks, Sara! I really do appreciate it!
Dan says
Hello, my defaults have dropped off my credit file after 6 years and my score has gone up to 999 which is amazing. I’m paying a DMP which was questioned by my mortgage lender when I took out a mortgage early last year. And meant I got a higher interest rate. I want to remortgage early next year but worried a new mortgage lender will again question the DMP on my bank statement and give me a higher rate or not consider me. Is it worth stopping paying my debts now that they’ve all come off my credit file which means this payment won’t show on my bank account? Obviously they won’t come up on a credit search but a dmp payment is showing on my bank account each month. I know morally, I still owe the money but a lot is old debt left on me by an ex and I’m hoping for a bit of a clean slate. And carrying on the dmp will take many more years to pay off. I obviously don’t mind paying the DMP if I have to but is there any way around it so it doesn’t show anywhere and I can secure a decent interest rate? Thanks
Sara (Debt Camel) says
What interest rate are you paying at the moment?
worried a new mortgage lender will again question the DMP on my bank statement and give me a higher rate or not consider me
This is definitely going to be a problem for you.
if you just stop paying the debts, the chances are some of the creditors will take you to court for a CCJ which will destroy your chance of a mortgage at an OK rate for 6 years.
Your options are to:
– ask the creditors to produce the CCA agreement for the debts, see https://debtcamel.co.uk/ask-cca-agreement-for-debt/. This only applies for loans, credit cards, catalogues and HP. If they can’t, then you can simply stop paying as the debt in unenforceable in court
– make full & final settlement offers to the DMP debts, see https://debtcamel.co.uk/debt-options/less-common/full-final/
Dan says
Hello, thanks for your quick response.
My interest rate is 4.74% , fixed until March 2023. It was the only mortgage available to us due to my debts but they now have dropped off my credit file. So what you’re saying is even though they’re no longer on my credit file, because I’ve been paying them through a DMP, they are still enforceable?
Do you think I have a better chance of other mortgages now with my credit score being so strong (although still paying into a DMP?) Worried as their variable rate was 5% above the base rate when it was 0.1%)
It’s all loans (joint with ex) , credit cards that I used to pay off my then partners debts.
I can afford to pay much more to these old debts to be honest but have only paid a few pounds to each, purely because of the situation my ex left me. Silly idea at the time but it is what it is and I know none of this is really relevant. My own daft fault !
I pay the DMP by standing order thinking the mortgage company might not spot it like they would with a Direct Debit saying ‘Payplan DMP’ but they questioned the payment anyway.
I might try the original agreement route too.
Thanks so much ,
Dan
Sara (Debt Camel) says
So what you’re saying is even though they’re no longer on my credit file, because I’ve been paying them through a DMP, they are still enforceable?
Yes. A debt only becomes statute barred if you haven’t been paying it for at least 6 years. Making low DMP payments and it will never become statute barred.
Do you think I have a better chance of other mortgages now with my credit score being so strong (although still paying into a DMP?)
Not because of your credit rating, No. But the fact you have repaid the mortgage without problems will be of some help.
Worried as their variable rate was 5% above the base rate when it was 0.1%
Ouch. Too often bad credit mortgages are a trap – the brokers always say you will be able to remortgage at a better rate, but you may not be able to.
I can afford to pay much more to these old debts to be honest
Well you could save up the money and make settlement offers from that?
I might try the original agreement route too.
Worth a try for any where the debt has been sold to a debt collector.
Dan says
Also, if I start writing to my creditors to request a copy of the original agreement and to write the debts off if they can’t provide it, is this then more likely they will now look at court action to protect themselves?
Sara (Debt Camel) says
if they can’t provide it, then the debt is unenforceable in court.
This isn’t a guaranteed route, but it doesn’t sound as though you have any nice options here.
Dan says
Thanks for your responses.
Yes so if they do have the original credit agreement, will me writing to them push them to go to court to protect themselves?
One of my debts – the largest- is still with NRAM. It was the unsecured loan they gave out in order to buy a house years ago. The others seem to have been sold on a few times.
It’s a nightmare as the reason I stopped paying properly is because I thought “why should I pay back debts for my ex?” Over 8 years later and it’s still affecting me and sounds like it always will .
Sara (Debt Camel) says
so if they do have the original credit agreement, will me writing to them push them to go to court to protect themselves?
That’s unlikely but it will make them open your file and they may ask you to pay more.
It’s a nightmare as the reason I stopped paying properly is because I thought “why should I pay back debts for my ex?” Over 8 years later and it’s still affecting me and sounds like it always will .
It is a great pity you did not go bankrupt 8 years ago and get a clean start. But you are where you are now.
Steve says
Hi Sara,
I’ve messaged you recently in regards to inheriting my Fathers house which has roughly 15k outstanding balance, by the time I apply for a remortgage I will only have 5k worth of credit card debt, I have paid off 4 cards, and paid off a loan, I am using a broker and he says I have been pre approved for a remortgage of 40k with Barclays, I’m now awaiting grant of probate, do you think the news of the pound plummeting and certain lenders pulling mortgage offers in response to the expected Bank of England interest rate rise, will affect my chances of succefully getting the mortgage?
Sara (Debt Camel) says
I’m sorry but you need to ask your broker.
HelpBabe says
Hello, would love some advice.
My current credit rating is poor 589 Experian, due to a 2 year 9 month old small default for £100 car insurance which I paid when discovered several years ago.
Another reason it is poor is due to high credit card utilisation. (£12k) plus I use my full overdraft each month (5k). I’ve recently paid off a smaller overdraft £1.7k, and two smaller credit cards (£1.5k and £800).
Next month I am going to pay my Amex in full with my bonus (£7k) and within three months I will have paid off my NatWest credit card £5k (of £10k limit but card was not renewed when it expired 18 months ago so I can’t actually spend the limit). And will no longer need to use my overdraft.
So by June I should be debt free and ready to purchase a house this time next year.
By then I will be debt free, have 0% utilisation on credit cards and my default will be 4 years old. My salary is £115k and I will have a £70k deposit for (ideally) a £500-£600k home.
Should I have any problems getting a mortgage?
Sara (Debt Camel) says
The mortgage market can never safely be predicts, but that all sounds promising to me. Apply through a broker, not direct to a lender but you should be able to get a mortgage from a high street lender at an OK rate is my guess.
HelpBabe says
Great, thanks for the speedy reply! I will come back and update on how my score changes. Thanks again – love your site and the handy advice !
Rebecca says
During mat leave 2021 during the peak of the pandemic, my partner had been furloughed and we had no wages from him coming in and just my maternity pay which is under half my normal wage. I missed two of my credit card payements to hsbc. They rang me in March and we discussed why as I was struggling for money and they suggested a solution which was to freeze the payments on the account until I was back at work in October 2021. When it came to October I paid the entire remainder of the card off £1200. In the November of 2021 I came to renew my mortgage and my mortgage advisor said he was struggling to find me a deal he said no one would lend me because of my credit file?! I was confused as to why this would be so when I checked my credit file with him he said you have a black mark from Hsbc and it states I’ve “missed 8 months payments” I explained I hadn’t missed these payements but I had frozen them but they have shown as missed as though I have ignored them! I have gone back and forth with Hsbc and asked if they can re-code it to show it was frozen and not missed and they’ve said there is nothing they can do. the financial ombudsman said there’s nothing they can do as they’ve listened to the call and it was stated the hsbc advisor that my credit would be affected. That is correct but she never at any point said – this will look like you’ve missed 8 months payments! All I want them to do is re code it and I can’t seem to get through to anyone. I really hope you can help me.
Sara (Debt Camel) says
This may sound irrelevant, but do you just need a new mortgage fix? Same amount, same term? Who is your mortgage with?
Harry says
Help! I ended up defaulting on two personal loans as a result of COVID. The loans have been in default for almost two years now but I am now in a position to pay them off or negotiate full and final settlement. As far as I understand it, the damage is already done to my credit rating regarding of paying in full or offering less. If this is the case then is there any tangible advantage in paying the loans in full rather than offering a lower amount? Both companies have already been in touch offering me around a 25% reduction to secure full and final payment. I want to maintain my credit rating as best as possible and am worried about mortgage applications in the future.
Sara (Debt Camel) says
See https://debtcamel.co.uk/dmp-partial-settlement/
Also the creditors may accept a slightly lower offer.
Grace says
Hi Sara,
Thank you for all your help here, firstly.
My partner and I are planning on buying our first home in March 2024. He has an excellent credit score and now since last month I also do. However, up until last month I was utilising my credit card at 80-90% which I have now stopped using and plan to keep it this way, it has a limit of £800. I also have a closed Capital One card (300 limit), a Bamboo loan (1k) and 2 Lending Stream (600 each) loans showing on my account from 2019 and 2020, all settled with no missed payments.
Our combined income is £110,000 (more if they take our bonuses into account) and we have a combined deposit of £65,000 (he has contributed to 50k of this). We live in London and are looking for a house up to 450k as we are using LISAs.
My question is whether I would have an issue being approved for a mortgage due to my more complicated report and how long should I wait until I apply? Would March be too soon?
Sara (Debt Camel) says
Lending Stream – when were these loans settled?
Grace says
Settled in August 2019 and Sept 2019
Sara (Debt Camel) says
ok, that is long enough ago for most mainstream lenders to not worry about payday loan usage.
Previous high credit card usage doesn’t much matter. What matters now is that any utilisation looks very low. I suggest using the remaining card for one purchase of under £100 a month and repaying this automatically in full by direct debit so you are never charged interest.
You also need to think that your last 6 months bank statements may be looked at. No Klarna or any other BNPL is best. Keep Christmas to a sensible level and don’t go on great ski trip in January – you want your bank statements to look boring.
March should be fine. or even earlier if your bank statements already look dull!
Go through a broker, not direct to a lender, and tell the broker about any lenders you have had difficulties with in the past. And about the oldish payday loans.
Grace says
Great, thank you Sara. Is Lending Stream considered a payday loan by lenders? It appears as unsecured loan on my report.
Sara (Debt Camel) says
It is a payday lender. If you look at a statutory credit report (see https://debtcamel.co.uk/best-way-to-check-credit-score/) I think you will see a flag against those records as payday loan.
Grace says
Ah, okay I didn’t realise. I checked my report with all 3, the Lending stream loans don’t appear on my Equifax report at all; on Experian they are marked as ‘Loan’ and on TransUnion they’re marked as ‘Unsecured Loan’ type, no flags on any of them. I wonder why that is and would that be beneficial at all?
Sara (Debt Camel) says
You are checking the statutory credit reports? That is weird.
But it isn’t going to help much because as i said these loans were settled a long time ago so most lenders wont care.
But you must still go through a Broker and tell the broker the full story