Having a recent payday loan on your credit history can make it much harder for you to get a mortgage at a good rate – or even at all!
If you have used payday loans, the rule of thumb for a mortgage application is to wait until at least 2 years have passed after your last payday loan was settled.
Before coronavirus, the usual advice was to wait one year. But from 2020 many mortgage lenders have tightened their mortgage requirements.
Even after the two year point, with payday loans showing on your credit record you should always go through a good broker. And you may still have difficulty if you had a lot of payday loans.
One way to try to clean up your credit record is to make a payday loan affordability complaint.
Payday loans make getting a mortgage hard
How do lenders know you have used a payday loan?
Mortgage lenders check your credit records when you apply. Most will do this before giving you an “agreement in principle” and they will then recheck more thoroughly before approving your actual application when you have found a property.
These credit checks don’t show exactly who you borrowed from. But they do show the sort of borrowing – loan, overdraft, credit card.
All three credit reference agencies in Britain – Experian, Equifax and TransUnion – show short-term high-cost borrowing such as payday loans separately from other loans. So a mortgage lender can see if you have used payday loans and when your last one was repaid.
Why do mortgage lenders care?
Mortgage lenders are a cautious bunch because they are giving you a large loan for 25 years or more. Although they have your house as security, they only make profits on lending where the borrower does not get into big financial trouble. So they want to weed out any applicants who may get into difficulties.
People in a good financial position don’t need to use payday loans – they have better ways of borrowing that don’t involve interest rates of 100% or more.
So using a payday loan, even if you repaid it on time, is seen by most mortgage lenders as a big warning sign that you had financial problems. And if that is recent they are probably going to reject your application.
As Which? says:
In a financial rough patch, you might turn to a payday loan, but doing so can have repercussions for years to come. Many lenders are unwilling to lend to someone with a payday loan on their record, even if it was fully paid off on time and from several years ago.
But doesn’t a repaid payday loan help your credit score?
Yes, it does. Making the payments on time for any sort of credit adds positive marks to your credit record. Unless you have a lot of big problems in your credit history, repaying a payday loan will tend to improve your credit score.
But your headline credit score isn’t a number that matters to a mortgage lender so this won’t help a mortgage application at all.
Instead they look at the details of all your borrowing and that includes whether you have used payday loans recently.
“Recently” – how long ago is ok?
Mortgage lenders set their own criteria here:
- some don’t like to see any payday loans at all, ever;
- a year used to be a common rule. This is what one reader said in a comment below this article:
My last payday loan was in November 2017 and I got a mortgage with [a high street bank] in January 2019.
I had waited 12 months to clear the “recent” impact of payday loans. - from mid-2020 there are indications that most high street lenders now want to see that your last payday loan was more than 2 years ago.
What are your options?
If you are some way away from actually applying for a mortgage, the implications are simple. Avoid payday loans!
You may feel that making the maximum savings into your LISA is the best thing to help with your house purchase, but if that leaves you so short of money that your credit record suffers or you have to get a payday loan in an emergency this isn’t sensible.
If you missed some payments or had defaults on payday loans
Here it isn’t just the payday loans that are the problem, it is the negative marks on your credit record.
If the payday loans you had were unaffordable, you may be able to complain and ask for a refund of the interest you paid. Getting some money back would be good for your deposit and it has the good side-effect that negative marks are usually deleted from your credit record!
This is one of the very few situations in which defaults can be removed before they drop off after six years.
So if your payday loan borrowing had defaults or late payments, this could clean up your credit file. Find out more at How to ask for a payday loan refund.
Has your lender gone bust?
If you borrowed from a lender which is in the early stages of administration (that’s like bankruptcy for a company) then you can make a claim to the administrators about unaffordable lending.
But if they have are in the late stages or have already been liquidated as a company, you can still get those loans removed from your credit record by asking the credit reference agencies to “suppress” them because the loans were unaffordable but you can no longer get the lender to remove them.
Did your payday lender say they would help your credit record?
Some payday lenders say using their loans will help your credit score. Paying any credit on time helps your credit score, that’s true…
But if the payday lender website or app doesn’t also say that payday loans show as a special category on credit reports and that some lenders, especially mortgage lenders, are likely to decline you if you have had payday loans, then that is misleading.
In this case, you can complain to the lender and ask them to remove the loans from your credit record entirely. If they refuse, send your complinat to the Finacial Ombudsman.
Take a screenshot of the misleading information to help your complaint. If you are sure you saw it, but the website has since changed, have a look at old copies of the website using the Way Back When Machine.
If you had payday loans & they were repaid on time
If the payday loans were repaid without problems, then:
- wait until the last one was repaid more than two years ago;
- after that point, talk to a good broker who will know which high street lenders are likely to approve your application; and
- also have a look at whether you can get a payday loan refund. It won’t help your credit record but it could boost your deposit.
Applying directly to a lender is taking a gamble, so it is always better to go through a reputable broker.
This doesn’t have to be a “bad credit” broker if the only problem on your credit record is a few payday loans. Two good brokers are London & Country, a fee-free broker that covers the whole market and Habito which has an online service.
Last updated in January 2021.
Will defaults stop me getting a mortgage?
95% mortgages – what you need to know
35-40 year mortgages – be careful!
Jim says
Interesting. A friend said getting a pay day loan and repaying it would help my credit rating – is she wrong?
Debt Camel says
Your ‘credit rating’ isn’t a single figure that all lenders use. Different lenders have their own scoring systems. What is clear though is that most mortgage lenders do not like to see payday loans on an applicant’s credit history – even if they were repaid in full and on time.
Mortgage lenders are lending a lot of money over a long term and at the moment they are being VERY fussy. Some brokers say they feel lenders are looking for reasons to turn turn people down.
Non-mortgage lenders may not care so much about payday loans. And some of these may even see a loan rapid correctly as being good for how they score your credit rating.
Sara (Debt Camel) says
Yes and No.
It may help your credit score – although if your credit is poor because you have missed payments, defaults and you are using too much of your credit record, any improvement will only be tiny. And if repaying the payday loan causing you to pay less to say a credit card or exceed your overdraft limit then your score may get worse.
But more importantly no lenders actually use the credit score number you see. They all have their own rules and they may see using any payday loans as a warning flag you are desperate. High street mortgage lenders will all reject a mortgage application if you have recent payday loans. The rule of thumb used to be 1 year, but since the pandemic many are now saying 2 years.
Sarah-Jayne says
Just how long ‘in the past’ do you think these things will affect a mortgage application? I had a few (all paid off on time, if not early) in the second half of 2012, with the last one being paid off in Jan 2013. I am looking to start applying for a joint mortgage in the first half of 2014 – do you think that if they are a year old + it will be ok?
Debt Camel says
It’s hard to tell as lenders don’t publicise their criteria, but remarks on the web from brokers suggests that over a year is probably OK.
Marica says
Does each one show up on your file for 6yrs?
Sara Williams says
Hi Marica, yes individual debts show up on your credit file. They will drop off 6 years after the any default, or if there wasn’t a default then 6 years after the last payment.
Victoria W Warren says
Hi I’m looking at getting a mortgage in July this year. Sadly I used to use payday loans I payed it up July 2014.iv not used it since and never plan to use them again.my credit score is 858.do you think ill be able to get a mortgage. It’s going on my husband wage but as I will be on the mortgage I also will have to have the credit checks done.
Sara (Debt Camel) says
Hi Victoria, it will depend on how the lender you apply to assesses your credit record – they are all different. Check your credit records with all three credit reference agencies and get any errors corrected. It may be a good idea to go to a mortgage broker.
Victoria W Warren says
I’m with a mortgage broker. They have told me to wait a year from when I payed of the payday loan. From what I’ve read about payday loans I’m worried ill just get turned down again. We got a mortgage two mouths again and was about to set a move in date. But the lender pulled out at the larst min.we are so Hart broken.
Katie G says
Whilst I was at uni I struggled financially and took quiet a few payday loans (stupid I know I was just too proud to ask for help). I’m now 2 years clear and looking to apply for a mortgage in 2016 with my partner will there be an issue? Or do you think 3-4 years is enough for them. I’ve built up my savings very well and have used more reliable credit over the past 8 months eg my credit card.
Bit worried any help gratefully accepted
Sara (Debt Camel) says
Hi Katie, most of us did a few things at uni we now wince about, but it’s very annoying when they haunt you afterwards. I would be surprised if 3 years clear isn’t fine – though of course who knows what the mortgage market will be like in 2016? Little or no credit outstanding and a track record of increasing savings should be good. best of luck!
Jemma says
Hi. Me and my partner can not get a mortgage due to pay day loans on our file from last year. The last one was paid off in September 2014. We always paid them off in full and on time if not earlier.
We have since applied for a mortgage in April 2015 and been refused because they are on our credit file, despite our credit scores massively improving and paying off credit card at a higher rate.
Our mortgage broker told us that we
need to wait at least a year before we try again as the pay day loans are the reason we are being declined. So frustrating.
My advice would be try not to get one, which I know can be easier said than done when you are strapped for cash, unless you know you don’t want to buy a house for a couple of years.
Ant says
Hi, this article has just filled me with dread.
we have just sold out house and are moving back in with parents for 3/6 months to save up a larger deposit and then will need to apply for a new mortgage, the issue is we have used payday loans over the past few months, we have cleared these and always paid back in full at the end of each month and have cleared our other debts so will have no debt when we reapply, with the pay day loans though will this means we have no chance of getting back on the property ladder?
Sara (Debt Camel) says
Hi Ant, In 3-6 months you may well have a problem, It’s hard to be sure as most people that have payday loans also have a poor credit record, so it can be hard to disentangle the two problems and see how much lenders really care about a few payday loans repaid on time.
Anecdotally the payday loans problem “ages” pretty quickly. After a year it should be OK.All you can do from here is be absolutely fanatical about keeping your credit files clean – no extra searches. See “on a countdown to a mortgage” here: https://debtcamel.co.uk/mortgage-with-debts/. And save up as much as possible for the deposit. Lenders do balance deposit size against minor credit file problems.
Ant says
Thanks, we are looking at a new build using the help to buy scheme so will have a 25% deposit and both our credit scores are good on experian
Thank you for the advise, my salary has improved since needing the pay day loans so hopefully this will go in our favour?
Sara (Debt Camel) says
Higher salary to loan ratio and higher deposit is always good and will be noticed. Best of luck!
Gareth says
Looking to buy a house £200k- £250k will be 85% LTV . I earn 75k partner 29k. Her debt only debt is car finance 1 year left £400/month). She has 3k credit card 0 balance. I have personal loan 2 years left £305/month. I have 2 credit cards 0 balance with £7k and £3k limits. In the last 8 wks I have cleared £5k from them in prep for applying for mortgage. Only other outgoing are current rent, council tax etc from property we stay in currently.
The issue is few years ago I didn’t have credit rating as never used credit for years and stupidly fell for the wonga lie that it improved your rating. They were always paid back on time and last was almost 2 years ago. Will this being 2 years ago stop me from getting high street rates?
Sara (Debt Camel) says
Hi Gareth, if the only things wrong with your two credit ratings are your Wonga loans 2 years ago, then you will probably all right as your income to loan ratio is very good. You could consider going through a mortgage broker – certainly if you apply direct to a high street lender and get turned down make your next application through a broker.
Jane says
My boyfriend and I are currently saving for a deposit. If we continue to save as we are we plan to have £20,000 saved by this time next year. Currently we owe £700 on a credit card but that will be paid off in the next 6 months (0% and we pay far more than minimum each month). Collectively we earn £40,000 a year. We are hoping to borrow £120,000 but my boyfriend had payday loans 2 years ago. I have a credit score of 990. How much will his payday loan history affect our chances of securing a mortgage?
Sara (Debt Camel) says
Anecdotally, lenders don’t seem to mind about payday loans if they are more than a couple of years ago, which his will be by next year. And with more than a 10% deposit you should be OK. Obviously be fanatical about keeping your credit scores clean this year, be extra careful if you change mobile providers that you have completely settled anything owing to the previous mobile co.
One thing you might think about though is whether his loans were “affordable”, because if they weren’t he may be able to get a refund of some of the interest he paid and sometimes the loans themselves are removed from a credit file… see https://debtcamel.co.uk/payday-loan-refunds/. If he just had 1 or 2 and repaid them easily, this probably isn’t worth it, but a lot, or repaying then reborrowing from the same lender it’s well worth a try!
Gareth says
Just an update on my post from September , in December we got accepted for a £250k mortgage with a 10% deposit from a high street lender and nothing was ever mentioned about the payday loans. I was terrified it was going to cause a problem but from application to completion in just over 2 wks not a thing was ever asked about them. It seems as long as they were in the past and your credit history is spotless since it won’t cause you an issue.
Camilla says
Would you be able to tell us which high street lender this was please Gareth? I have payday loans that are over 3 years old but I used them most months from 2010-2013! Looking to buy in the next 6 months or so…
Gareth says
It’s was Halifax, i honestly don’t think you will have any issue as long as you have looked after your credit history since
Camilla says
Thanks! Yep all clear apart from then…
Coops says
Thanks for the Ray of hope Gareth.
Cheryl says
Hi
I currently have 4 payday loans which I’ll be paying back in full in September plus 2 door step loans I am paying back weekly. How will this affect my credit file? I am wanting to take a mortgage out in the future in 4 years time How long will these loans stay on my credit file?
Regards
Sara (Debt Camel) says
Loans stay on your credit record for 6 years from the date you repay them (or 6 years from the default date, but this doesn’t sound relevant to you.)
So in 4 years the payday loans and doorstep loans will still be showing on your credit record, but if they were all repaid on time, this shouldn’t be a problem. Mortgage lenders only mind about recent high costs lending, not loans that were 4 years old. So if you can repay them all now and not borrow again, this shouldn’t be a problem for a mortgage application.
M says
Hi can you get payday loans removed from your credit file
Sara (Debt Camel) says
This may be possible if the loans were “unaffordable”. Read https://debtcamel.co.uk/payday-loan-refunds/ which looks in more detail at what “affordable means here (a loan may be unaffordable by the regulator’s definition even if you repaid it in full and on time) and has template letters for you to use.
Natalie says
Hey Sara! I have had all defaults and negative marks removed from my file but I have a few payday loads still in the closes account part on there one account just over a year ago will this affect me getting a mortgage? Literally life changing isn’t it :( scared to try
Sara (Debt Camel) says
Go through a broker, not direct to a lender. Anecdotally you should be OK with a lot of lenders if no payday loans in the last year.
ManagedAMortgage says
Hi all
With the keys to my new property jangling in my hands, I’m now happy to share my mortgage story following payday loans. I started the refund process rolling in September 2016, contacting the payday loan companies and challenging them for being unfair; I had a good amount of success and received just over £2000 in refunds (thanks to this site) as well as having many, but not all, removed from my credit file. In April this year, my partner and I found a property we loved – she was fully in the picture with my PDLs and we did not expect to have any success in applying for a mortgage, with my last payday loan being taken in August 2016. However, we were accepted with a major high-street lender at “prime” rates (i.e. sub 3%). So, there IS hope, and if my experience is anything to go by, you do not need to wait even a year. And you certainly do not need to look only at the horrific rates of Precise and their ilk.
We had a 10.1% deposit so our mortgage was 89.9% LTV on a property valued at £320k. We earn £80k between us, me £60k her £20k. We went through a broker and were absolutely up-front about the PDLs (which never came up again after the initial conversation with the broker). My debt was car finance of £800 (final few payments) and a credit card balance of £3500. No missed payments, no late payments – in fact no blemishes on the credit file at all other than the presence of payday loans. Partner’s debt – £200 on a Next account.
I hope my story brings some relief to anyone reading; some websites will tell you that if you have had a payday loan in the last 6 years, you automatically won’t get a mortgage. This is patently untrue. Find a good broker, BE HONEST and look after your credit file, manage your spending and if our story is anything to go by, you’ll be alright.
I wouldn’t be in this position without Sara and her hard work and this website. I am now a homeowner, have manageable debt and most importantly, I broke free of the payday loans and their impact on my life.
Sara (Debt Camel) says
Congratulations! And thanks for updating us.
Antony Frost says
HI Sara
I first communicated with you several months ago regarding getting a Mortgage after having a large number of Payday loans in the past. You advised me to use your template above and contact all the companies i ever had a loan with and try and get refunded and removed from my file.
Thank god i took your advise…
Several months on i have had the payouts from:
Wonga £3700
Quickquid:£870
Pounds to pocket: £470
Lending Stream:£270
Payday UK: £474(Financial ombudsman)
Payday Express:£?(Financial ombudsman ruled in my favour waiting for offer).
Not only this but my credit rating improved from 624 to 986 !
Following this i applied for a mortgage last month and have just been accepted for a full mortgage on my first property with my wife.
I really cant thank you enough Sara, without your advise i would not have just bought my dream house with my wife. You have changed the path of my life with your excellent advise for the better and i will be eternally thank full.
I urge anyone who is reading this to take Sara s advice. You have nothing to lose.
Thanks Anton
Michelle says
My complaint with myjar was upheld for irresponsible lending in October 2017. At the time, they said they could not remove the loans from my credit file as it was not negative information (I had repaid the loans on time but was taking out the loans again the next day).
I have recently begun to speak to a mortgage advisor and they have said the frequency of the loans may be seen as negative my some mortgage lenders. I have emailed myjar and explained the situation and have asked for them to be removed. MyJar say they are unable to do this as they need to reflect my borrowing pattern.
Is there any chance I could Appeal this with the FOS? I’m led to believe that should I have defaulted on the payments it would have all have been erased!
Sara (Debt Camel) says
How long ago were these loans?
Michelle says
Last ones 2016? Regular and repeated monthly – around 20 loans listed, all settled but doesn’t look great!
Sara (Debt Camel) says
That long ago there should be high street lenders that don’t care about them if there were no missed payments of defaults. If your broker doesn’t have any good suggestions about who to apply to, talk to a different broker!
C says
Hi Sara,
Kind of similar to Michelle, I Asked above this post about when the 12month mark starts to be considered, is it when the loan is taken or when the last payment is made do you know.
And can you advise on any of the best mortgage brokers for helping in these situations please, I’m looked at your advice and I don’t want to be approaching lenders myself really.
Thanks again.
Sara (Debt Camel) says
That is a decision for each individual lender to make. There is no rule they have to follow. Assuming it is the date the loan is settled would be sensible.
Sorry I can’t advise on mortgage brokers.
C says
I know this section doesn’t get checked much, but for anyone looking at getting a mortgage after payday loans…
My last loan November 2017 and got a mortgage with Santander in January 2019.
Waited 12 months to clear the “recent” impact of payday loans.
Not advertising them, as many are available, but I used L&C as a broker and they were excellent. Plus you don’t pay a penny as they get their commission from the mortgage lender. They also contacted lenders direct to check prior to getting a mortgage in principal, again helping not to get hopes up and impact credit score if going for full application.
All the best with applications and my suggestion taken from the broker is try and give yourself the 12 months between last loan and payment, before applying.
👍
Sara (Debt Camel) says
Good advice. Many lenders don’t mind payday loans where there were no defaults or missed payments if they were repaid more than a year ago. But always go through a broker if you may apply to one if the lenders that does mind and get rejected.
If you have defaults or missed payments, make an affordability complaint, see https://debtcamel.co.uk/payday-loan-refunds/. They ask for a refund of interest but as a side effect if you win your complaint any negative marks on your credit record will be deleted.
C says
Absolutely Sara,
I had a late notice and two payment arrangements (not DMP’s) removed from my credit file.
Also, the refunds I had paid off my credit cards and went massively towards my deposit which again is a win win.
Claim claim claim!!!!!!!!!
Thanks Sara
C
saheeda says
It is definitely possible to get a mortgage after a payday loan
I had a history of payday loans in 2017 and cleared them all off by early 2018
I exchanged this week on a property. The most important thing they look at is your credit, whether you can afford the loan (mortgage) and the monthly mortgage payments
Try to avoid missed payments and go with a broker who can give you the best advice . if there’s any wrong information on your credit report also get that removed
Neil Clarke says
Applying for a mortgage and had a pay day loan two years ago. Won’t lie absolutely terrified of getting declined and know it’s my own fault getting one in the first place. Do you think I will be successful as already have an aip (know this doesn’t make a dead cert) Any info would be great thank you.
Sara (Debt Camel) says
Did you go through a broker? If you did, it should be fine as the broker should know which lenders are very fussy and will decline if you a payday loan 2 years ago.
If you didn’t, well you will probably be ok as most lenders one mind 1 loan 2 years ago. But no guarantee.
Neil Clarke says
We have a broker but he’s never asked. I will find out tomorrow as going to see if we can get approved on a joint mortgage with my partner. Recently payed off my credit card and overdraft so do t have anything like that. Thank you
Sara (Debt Camel) says
Good luck!
Neil Clarke says
Sleepless nights just hope we’re successful. Thanks for the info
Mariya says
Hi,
I took a pay day loan 1 year ago never defaulted and paid back straight away, I have an overdraft of 2,500 and a credit card 1,600 which I’m paying off and will have paid off by the time I get a mortgage.
Halifax have given me an AIP for the 150,000 the House I am buying Is 185,000 I am going through a broker and they have seen my credit file and know of the pay day loan, they said I shouldn’t have a problem as I have cleared it straight Away and because it’s one year ago.
Please can someone advise me if this will be ok.
Sara (Debt Camel) says
Most lenders don’t mind a payday loan that old. Hopefully your broker is right – good luck!
C says
Hi mariya
I was in a similar boat 6 months ago but with a massive history of PDL’s.
Going back for 7 years prior.
The last loan was paid of in the November 2017 and got the mortgage approved in january 2019 for £285k with high street lender via a broker.
I went through my history above, and the brokers are the best way to go in my opinion as they check with the lenders first to save impacting credit history.
All the best.
C
alin cristian vatui says
hi i had 2 payday loans ..i never knew what is all about before i checked mortgage approval criteria ..i paid in full both of them in 5 days .
will still be a problem ? i got the house reserved allready .
thank you
Sara (Debt Camel) says
I suggest you talk to a good mortgage broker about this.
Neil clarke says
Just want to say. My last pay day loan was 2 years ago. Never thought we would be accepted for a mortgage and just moved into my house last Thursday. Didn’t even mention to mortgage advisor about having pay day loans. Nationwide was our mortgage provider. So happy.
alex says
Hi Sara,
I have about 10 payday loans showing on my credit report during 2018, the last being taken out on 27/12/2018. I have not taken one since.
I plan to apply for a AIP in January for a new build property with my girlfriend.
Should these payday loans be ok now they are over 12 months ago? They are a mix between lending stream, quick quick and sunny.
Sara (Debt Camel) says
When was the last of these loans repaid? What are the rest of your debts like – any defaults or late payments on your credit record? What % deposit do you have?
Alex says
Hi Sara,
My last payment made to sunny was 4th July 2019, but I havent taken a loan out since December 2018.
Ive done quite a few affordabilty complaints so have managed to get everything this year removed as i read to leave 12 months.
I have an ongoing loan with Sainsbury and Everyday Loans which equats to £396.00 together. Ive had one late payment on my Sainburys loan dating back to 2017, although this wad due to a system error.
I am ammplying with my girlfriend who has a good credit history.
We have a 5% deposit, so £10,500 and will be using the help to buy equity loan. So total deposit is 25%
Also, we have a combined icome of £46K
Sara (Debt Camel) says
have you tried to get the late payment marker removed on the Sainsburys loan?
Is that £396 remaining on the two loans or £396 a month you are paying?
The problem here is that the “no payday loans in the last year” is a rule of thumb, it’s up to each individual lender what they do. Some may see this as no payday loans TAKEN in the last year, others as no payday loans BEING PAID in the last year. I suggest you talk to a good broker now. This is also complicated as not all lenders to HTB loans.
Alex says
Hi Sara,
No i havent. I will try and do this tomorrow. Would this still have an effect if it was over two years ago?
The £396 is the amount i pay for both of my loans combined each month. This is sainsburys (£257) and Everyday Loans (£149.00).
Do you know which lenders dont want any payday loans being paid in the last year?
I have spoken to the house builders who have put me in contact with a broker at a company called The Mortgage Brain who seemed quite helpful. I explained my situation to her and she seemed to think we should be ok, although i still feel quite uncomfortable about it all.
Sara (Debt Camel) says
Getting any late payment markers removed is a good idea.
£396 a month to loans is a lot – this effectively reduces your salary by that much.
Only mortgage brokers have up to date info on which lenders are likely to accept what – I am not going to guess. If you don’t feel comfortable with the broker you have spoken to, talk to another one.
Shawn says
Hi ,
Looking for some help regarding payday loans,
I am looking to get a mortgage in early 2020 but have a long list of payday usage over the last 5 years last one paid off just over 12month ago with no missed payments.
No credit cards, no missed payments but have car finance which i owe around 7500 also with no missed payments
My credit scores look ok on clear score and experian and also credit karma but i can see the list of pdl’s that where settled just wondering if this is going to have a big impact really worried i have saved for the last 12 month and will have enough saved for a 10% deposit,
Thanks
Sara (Debt Camel) says
I hope you will be ok. Go through a broker, not direct to a high street lender.
If you borrowed a lot from the same lender, you could try to get a payday loan refund. If you do, any negative marks will be deleted and sometimes all or some of the loans being refunded are deleted from your credit record. This often isn’t quick, but worth a try? Could get you some cash back as well! See https://debtcamel.co.uk/payday-loan-refunds/
Shawn says
Hi sara
Thanks i am already in the process of doing an affordability complaint and wonga have accepted they miss sold me around 15 loans over 5 years, will these be removed from my credit file, they have emailed me to say i should receive what i am owed in january 2020,
JP says
Hi Sara, looking for some advice please.
I had a huge history of loans, payday loans and credit cards up until about 18 months ago. I have since paid everything off and made affordability complaints. 9 out of 10 of my complaints were upheld by FOS so I had interest refunded and negative markers removed for the large loans and some of the loans removed completely for the payday lenders. Annoyingly, just one of the complaints (against Likely Loans) was not upheld (I have no idea why as the circumstances were exactly the same as all the other lending) and for about 12 months I was in an “arrangement to pay” with them. The loan was paid off a year ago but now this is the only “negative” on my record.
I currently live in a house my Partner owns (mortgaged) and we’re thinking about buying together later this year. I have absolutely no debt now and haven’t for over 12 months (other than using a credit card which I clear every month) and between us we have saved around a 30-35% deposit.
His credit history is absolutely sparkling but i’m worried about the “AR” marker against this Likely loan from 12 months ago and how that might affect our application?
Any advice appreciated. Thanks
Sara (Debt Camel) says
It’s good that affordability complaints have made such a huge difference to your credit record!
With only one problem of =n your record, an arrangement to pay, that was paid off over a year ago, you may be OK. Especially as you have a great deposit and no debts. I suggest talking to a broker and see what they say, you may be fine.
G thompson says
Hi the advise on here has been amazing i was wondering if i still have time to process an affordability claim as wonga is now bust.
Sara (Debt Camel) says
No, the last date for claims against Wonga was September. You may still be able to claim against other lenders.
Shawn says
Hi jp did they remove the payday loans from your credit file if so how long did this take.
Thanks
JP says
All negative marks were removed and some of them were removed entirely. E.g where I had 10 loans, interest refunded on loans 4-10, all negatives removed and loans 8-10 removed from record entirely. It took a month or two in most cases.
anna baker says
hello,
myself and my partner are looking at getting a mortgage with in 1 year/18 months. We already have around £3k saved, and looking to save around the £10k mark.
I took out a couple of pay day loans, 2 years ago and paid off within 1 month. My question is, if my other half has a spanking credit score, would his score over rule mine, or do they take both into account? thank you x
Sara (Debt Camel) says
They look at both your credit records. Apart from a couple of payday loans, what is wrong with yours?
PJ says
Hi,
After reading the comments thread I’m feeling positive about my history now to a degree.
I just want to check this over though.
So I made an unaffordability complaint with wonga after a history of Payday loans not knowing how bad they were! They agreed 26 were just and will be removed all 26 off my record leaving 2 in 2015 and 2 in 2016, comp was rubbish at £40est but it was my credit history I was more concerned about! This should be cleared off by the end of march.
I have however had loans with Quick quid also, latest running to January 2018 with 18 in total before then. I have made an unaffordability complaint, which as we know will take a bit of time as the company is under administration since October 2019.
I have also got 2 Mark’s on my account one for a missed payment on a credit card in 2016 which was paid as soon as I knew! And a second was for a quickquid loan 42months ago which I actually didnt know about until this week, I have checked and it was paid.
How likley is it that I would be able to apply for a mortgage comfortably at my present scenario?
If not I would be looking at the end of 2021 just to pass some more time between the negatives on my account.
My partner who I’d apply with is squeaky clean and has x2 credit cards one with a 7k limit and another with 3k limit all paid off every month.
And has just paid her car loan off so has no commitments.
We are looking at a property est 180k with a 30k deposit.
Kind regards PJ
Sara (Debt Camel) says
The Wonga loans should be gone in a month.
The QuickQuid ones won’t go for about 9 months I guess.
One late payment to a credit card in 2016 shouldn’t be a problem for many lenders.
If you want a mortgage now, talk to a mortgage broker about all this. Don’t blindly apply to a lender and hope – a good broker will know the lenders to avoid and whether it would be better to wait a month until the Wonga loans go or 9 months till the QQ ones go,
Ash says
Hi .
I was wondering if anyone can help me. I’ve had pretty bad credit history lots of pay day loans I did get a lot removed. And the last one was paid off 12 months ago. I’ve had no late payments in 3 years but 3 years ago I had an arrangement to pay on 2 accounts (very and my car)
My husband has excellent credit score and we have saved 21% deposit for a 135k home. We earn 86k between us.
Has anyone been in a similar position when applying for a mortgage or even better has anyone got
Mortgage on this position
Thanks
Alex Hughes says
Hi. I was in a similar situation myself. I had a history of bad credit along with numerous payday loans. I did as advised on this website and cleared up my credit file as much as possible before making a mortgage application.
A year on and me and my girlfriend are just in the process of buying our first house. We have had a mortgage in principle with TSB and have made our full application which we are just waiting to hear if they have accepted or not.
We’re not 100% there yet but it is certainly possible. As long as you clear your credit report up as much as possible, have no pay day loans for over 12 months and don’t miss direct debits etc you should be fine!
Good luck!
Ashlegh says
Hi alex,
well done! when you say 12 months does that mean taking out 12 months ago or repaid 12 months ago. I.E my last loan was taken out 12 months ago however it was only paid off 8 months ago?
Thanks :)
Alex says
I made sure that the start date of all loans taken out was over 12 months ago. I think the last loan showing on my credit file was November 2018 and we made the mortgage application February 2020. My advice, do as much research online as possible and take all precautions when you do come to make an application. Clear debt, clean bank statements and a good broker and you’ll be fine! Good luck!
ashleigh says
Well I’m hoping to go for it in July we do have debts but live quite comftabley. We also have a 25% deposit. By July I’ll last loan will have been 1 year ago since closed so fingers crossed hope
Your application goes by with no problems
DB says
Hello,
I took out payday loans nearly 5 years ago and paid all off on time. I have improved my credit over the last few years but have around 7 missed payments on credit cards (no missed payment since early 2018). Do you have any advice please? I am hoping to start the moving process in the next few months.
Thanks
Sara (Debt Camel) says
how large is your deposit? How much do you currently owe on the credit cards? Any other current debts?
DB says
Hello – our deposit is around £35k. I owe nothing on credit cards currently and no other debts at all.
Our deposit is around 12-16% depending on house value. Very nervous to start the process with my past.
Sara (Debt Camel) says
At the moment it is very hard to get a mortgage with a 10% deposit even with a spotless credit record. I suggest you talk to a broker, but take their advice – it may be better to wait 6 months or a year until the mortgage market improves.
John peters says
Hi,
I have had hundreds of pay day loans in the past, most recent taken out in February 2020. I have paid up every loan I have had with no missed payments. My Experian score is 877. I make £2500 a month before tax. I have 2 bank loans still active, one will be paid in July and one will run until December 2021. My partner makes roughly the same as me and has a sparkling record and is 999 on Experian. If we went for a joint mortgage in January 2021 would we get accepted? We will have 20k deposit and a help to buy ISA each with 5k in each. We would be looking to get a house worth around 200k-250k.
I have just paid the feb 20 loan. I wasn’t in financial difficulty, I was just stupid at the time and wasn’t thinking. I am really worried that I’ll be rejected as my partner is thinking of this dream 200k-250k house at the start of 2021. I have a friend who is a mortgage advisor who thinks I’ll be ok as long as I don’t take anything else out.
Thank you.
Sara (Debt Camel) says
Well I hope your friend is right. Time does heal this sort of problem. If you get knocked back in March try again 6 months later and then another 6 months after that..
But who knows what the mortgage market will be like in 2021?
Certainly it is better to wait until after February 2021 as most lenders don’t like a payday loan in the last year. How many will not like the fact you have had hundreds is hard to say.
John peters says
Ok thanks. I’m not sure if it was a payday loan or if it’s classed as something else? It’s likely loans and it was a 12 month loan I had so I don’t know if that’s different ?
I borrowed £500 and can’t remember how much I was due to repay. I paid it off early though. I know it was just stupid!
Sara (Debt Camel) says
I think that may have been at c. 60% APR. That isn’t classified as a payday loan.
How about asking your partner to deal with your money from now on? :)
John peters says
Yeah she does that now! Thanks for your help. Hopefully I’ll be ok come the start of 2021!
Katie says
Hi,
I’m looking for some advice, I have had around 15 pay day loans, the last one dated jan 2016. No defaults and no missed payments etc. I haven’t used any pay day loans etc or anything like that for 4 months and 5 months and have just had an AIP agreed for a mortgage On a house of £280,000 which is 85% LTV. My partner has a perfect credit score and mine is now to, however the loans were less then 6 years ago so I’m expecting them to show on my credit history. I cannot see them myself on Experian but I’m aware lenders see more then what we do if that makes sense. I’m very nervous to apply for the mortgage and I’m looking for some advice to see wherever a high street lender would accept or decline me?
Sara (Debt Camel) says
I haven’t used any pay day loans etc or anything like that for 4 months and 5 months
I assume you meant to write “4 years and 5 months”.
Many lenders won’t care about such old payday loans.
Most old payday loans didn’t report to Experian, if they reported at all, it was to TransUnion.
It is a shame you didn’t go through a broker before making an application, but hopefully you will be ok.
Katie says
Yes sorry I meant to say years not months.
We have gone through a broker and he’s told me not to worry and the hard part is over as we have an AIP. I just wanted a second opinion so thank you that’s really helpful.
So are you saying that the pay day loans are not showing on my credit report because they are old and the companies I used didn’t report them to Experian? Does that mean lenders will not see them to or just me?
Thanks so much for your help.
Sara (Debt Camel) says
Loans repaid over 6 years ago will not show up on any credit reports. Have a look at your Equifax and TransUnion credit reports, see https://debtcamel.co.uk/best-way-to-check-credit-score/ to see if there is anything on there.
SB says
Hi Debt Camel,
I received an AIP last June from [a bad credit mortgage lender] for a new build and at the time my credit score was fair, it is now 962 and in the excellent mark. I have been reading that the score itself isn’t particularly important to lenders and they look at the credit history itself.
I paid off a CCJ in Jan 2018 which was around £550, however this isn’t being shown on any of my credit reports. I pay full for Experian and still isn’t being shown, neither it is visible on Equifax or Clear Score – does this mean it is now off my credit report all together? I paid monthly to clear it which took a year.
I also took out several payday loans between 2017 and 2018. The last payday loan was closed in Dec 2018 and I haven’t had any since. I also raised a dispute with a few of the lenders and a couple of loans were removed from my file last year.
My credit report states that I have 0 late payments and considered low risk. I have a credit card, phone contract and a very account which all show green payments on time for the last two years. I am paying more than the minimum balance on both the credit card and very account to clear it quicker and get it down before I go for my full mortgage application which should be within the next 6 months. will payday loan affect this?
Any advise would be greatly appreciated. Thanks in advance.
Sara (Debt Camel) says
I have no idea why your satisfied CCJ is not showing on your credit records, it should.
Was it ever there?
This makes it hard to know what to do. Without a CCJ showing there seems no reason why you can’t get a mortgage from a high street lender. Some lenders don’t like any payday loans. Some don’t mind if the payday loan were over a year old.
SB says
Hi Sara,
I know, I thought the same so I am completely at a loss as to why it’s not there!. I informed my mortgage advisor of this as I didn’t want to hide any like that from him but nothing can be seen. I’m assuming it was there for it to be made against my name and especially as I paid it off over a year and not all in one go. Would you recommend any other credit reports to go through to check?
Sara (Debt Camel) says
I suggest you talk to your mortgage adviser again about the possibility of getting a mortgage with someone else at a better rate.
SABLancs says
Hi, Just after some advice really. I took out several PD loans in 2012 / 2013 which resulted in multiple defaults and missed payments. I made affordability complaints back in 2016 and was successful on all apart from Lending Stream and MyJar. At the time my main aim was to be debt free so I negotiated and cleared the remaining balances.
It is now 2020 and I am looking to secure a mortgage, my credit and lending is now in good order, however the Lending Stream and MyJar loans are still showing on my credit file, they are now closed but show late payment markers up until 2016. Very frustrating as had I not cleared the balances in 2016 they would have now disappeared from my file (taken out in 2013).
Has anyone had a similar experience when applying for a mortgage recently? Is the lender likely to take into consideration the fact that the loans were taken out 7 years ago or will they only be interested in the date they were repaid? Thanks
Sara (Debt Camel) says
had I not cleared the balances in 2016 they would have now disappeared from my file (taken out in 2013)
That iosn’t right.
If the debts has been defaulted in 2013, then they would have dropped off.
But that would still have happened even if you settled the debts in 2016.
So the debts weren’t marked as defaulted. If you didn’t settled the debts in 2016 they would sit there forever.
What you can do now is ask the 2 lenders to add a default back in 2013, see https://debtcamel.co.uk/debt-default-date/. If they do, the debt will drop off.
SABLancs says
Ahh ok that’s very interesting and definitely worth a shot. Thank you !
Martin says
Hi Sara.
I have currently saved enough money for a 10% deposit for a mortgage. My worry is that at the moment with the Covid-19 situation more lenders are going to be a lot more strict. I have payday loans showing on my credit file – last one being over 4 years ago. I have no defaults. Any loans have been paid on time etc and have zero debt. My credit score is the highest it can be on Experian and also excellent on credit karma. But I keep thinking that I’m going to get refused because of the payday loans showing on my credit file. Do you think it’s possible that I will be accepted for a mortgage?
Thanks for your help.
Sara (Debt Camel) says
The title of this article os “Recent payday loans make it hard to get a mortgage”. Most lenders won’t care that you had payday loans 4 years ago. You may have problems as there are no very few 10% mortgages on offer, but talk to a broker.
Martin says
Yes, will do. Thanks for your help
Amy says
Hello,
My joint mortgage application has been “referred” according to our mortgage advisor, but he doesn’t know why…. all I know is that I am anxious about it now and worried it could be my fault for having had payday loans in Spring 2017 (more than three years ago). I paid them off on time and in full and had really not thought about them again until decided to apply for mortgage. Any ideas is this is what is an issue and causing it to be referred?
Sara (Debt Camel) says
I’m sorry but your broker is in the best position to guess what the issue is – he should know if that lender normally cares about old payday loans
Amy says
Thanks for your response. I can’t see why it would
be an issue if three years old, or does old stuff count against you? Seems a bit unfair if it does.
Apologies if these are silly questions but I am new to mortgages and finding it all very stressful :(
Sara (Debt Camel) says
Some lenders are very fussy – did you not discuss the old payday loans with your broker?
Amy says
I didnt because at the time I honestly didnt think it mattered and we were not asked by the advisor when filing out preliminary details. He didnt ask – he only asked about credit cards. Now, the mortgage we applied for wasn’t accepted because apparently the “credit score result was not high enough. The underwriter took a look at it and can only think it was due to not having much history of credit – crazy I know but some systems are sensitive to that – some lenders insist on clients having a certain amount of active credit accounts.”
So, other lenders will now be approached. I just dont want these old loans to be an issue, as I said, they are over 3 years old and I paid them off on time. I am still worried though.
Sara (Debt Camel) says
well make sure the broker does know about the payday loans now. I can’t say I am very impressed with you not being asked about debt problems in your past…
Dan says
Hi
I’ve been both the L&C and habito mortgage eligibility checkers and one of the first questions they ask is ‘have you taken out a payday loan in the last 2 years ?’ And as soon as you tick yes it then says they can’t help you and refers you to another broker that specialises in bad credit mortgages. I thought that a year was the general rule of thumb has this now changed to 2 years ?
Regards
Dan
Sara (Debt Camel) says
Was this recently?
Dan says
Hi
Yes it was yesterday that I checked in both websites .
Thanks
Danielle
Sara (Debt Camel) says
In that case things may be changing… It may be that always did say that, but no-one has mentioned it here before.
Over the whole mortgage market, extra restrictions are being put on. The lower deposit mortgages are disappearing. the self employed and being asked to produce more accounts, or are only having a proportion of their profits taken into account. Some lenders are disregarding or only taking percentage of commission and bonuses. etc into account. It may be that extending the bar on payday loans is part of this.
Sarah says
I am after some advice if possible please!
I am applying for a joint mortgage of £178k for a property which is £498k (offer made and accepted). The mortgage will be split between my partner and I.
The issue for me personally is old payday loans (quite a lot of them) which are around three years ad three months old, and have been paid off. My partner has no payday loans. Neither of us have any ‘adverse events’ on our credit scores.
We have an agreement in principle from a high street lender.
So, my questions…
What are chances of our application being declined on the above issue?
Will anywhere give us a mortgage at a semi decent rate?
Sara (Debt Camel) says
Most high street lenders won’t mind about payday loans that old. But “most lenders” doesn’t really help you know what will happen to your application. If you went through a broker and told the broker about the issue, they should have made sure you didn’t apply to a lender who will reject you.
Sarah says
Hi Sara,
An application has been submitted [today] via our broker. I have noticed a hard search appear on my credit report. However, haven’t heard anything since. How long does it take and would they have got in touch if there had been an issue? It is quite worrying not knowing what is happening.
Sara (Debt Camel) says
I’m sorry but your broker is best placed to answer these questions.
Damian says
Hi
I had payday loans recently but on all of them I used my right to withdraw within 14 day and repaid them. Will they still appear on my credit file to mortgage lenders or will they show as withdrawn
Cheers Damian
Sara (Debt Camel) says
Have you had a look at your credit records?
Damian says
They are showing as settled Loans but surely if withdrawn
It should not appear as the I withdrew from loan thereFore contract Is terminated ?
Thanks For speedy reply ?
Sara (Debt Camel) says
Well you have the answer to your question – they do show on your credit report.
I haven’t seen anyone try to argue that a loan they have withdrawn from should not show on their credit report. How many of these are there? how many different lenders?
How large is your mortgage deposit?
Damian says
Hi Experian
Am I like to get refused a remortgage because of this in your opinion
Sara (Debt Camel) says
ok, I suggest you also look at your Credit Karma report – check the settled loans bit as they don’t stand out like the open ones do
I don’t know if this will affect a mortgage application but there may be a difference between 1 and quite a few…
.
Damian says
Hi
Remortgaging property worth 3700000
Require mortgage 260000
There is one on my report for 300 1 lender
Show as settle with no payment history
Thanks Damian
Sara (Debt Camel) says
So you said this happened several times but you can only see one of them? which credit report are you looking at?
Jenny says
Hi, just wondering if it’s mostly the case now that you have to have payday loans settled for a minimum of two years to be considered by a high st lender?
If they’re 2-3 years old, will this matter?
Megan says
Hello, I have had one pay day loan in the past of £450, taken out in Feb 2019, settled early in April 2019. Do I have to wait 2 years from when it was taken out or from when it was settled? Also. are there any options currently for mortgage options before 2 years has passed so I don’t miss stamp duty holiday? And what kind of LTV’s would be the minimum? Thank you.
Sara (Debt Camel) says
There are no hard and fast rules about an acceptable time limit for payday loans before a mortgage application.
What is reported in the article above is that 1 year used to be a common rule of thumb for SOME high street lenders. But now two of the biggest broker, L&C and Habito will not take you on as a client if you have had payday loans in the last 2 years. You would need to ask them if that is from the start of the or the date you repaid it.
There are always bad credit lenders that will consider people with problems on their credit record. I normally recommend people avoid them and wait until their credit record is improved. Bad credit mortgages can be very expensive. they are often sold on the basis that “you can remortgage to a good rate after 2 years” but there is no guarantee that will happen especially if house prices decline because of Covid-19. You may be stuck paying a very high rate for many years if you do not have a LOT of equity.
Apart from the payday loan problem, it is VERY hard to get a mortgage with a 10% deposit at the moment.
T says
I had payday loan from Sunny and paid on time but they are now bust and agreed to remove the entry but didn’t do it? what can I do?
Sara (Debt Camel) says
when did they agree this?
Lauren says
Hi,
Myself and my boyfriend are in the process of getting a mortgage and currently have an offer on a house. We are due to see our mortgage broker to do the application but just need some advice and hopefully reassurance.
My boyfriend has an extensive history of payday loans he took out 19 between 2015-2018 (last one January 2018). They were all for amounts under £200 and all (apart from one where the credit report has a 1 which shows that a payment was one month late) paid back on time with no defaults.
The last two and a half years he has really turned himself around and has no outstanding debts – no credit cards, loans, overdrafts or any finance of any sort. His experien is 999 but I know they go deeper than this.
I have nothing to report on my credit history and have had a credit card over the last 6 years to build up my credit score which is currently at £0. I also have a 999 score.
We are both in government jobs (both work in education) and have not been subject to furlough and our jobs have been and are secure during COVID19.
What is the chances of us being accepted for a mortgage with his PDL history? We earn £75k between us, have an 18% deposit and was hoping to borrow 372k.
Sara (Debt Camel) says
You are borrowing quite a high salary multiple but everything else looks fine from what you have said apart from the payday loan worry. I would have thought that having been “clean” for 2 and a half years would be ok, so good luck… Could you come back and say what your broker said?
Lauren says
Hi Sara,
As promised reporting back the outcome. We submitted our application via a broker and I am pleased to say we have received our mortgage offer borrowing 5 x our salary (£368,000 with 18% deposit) it was such a huge relief given my boyfriends extensive payday loan history.
Darren says
Hi,
Myself and my partner are currently in the process of applying for a mortgage.
My partner has an exemplary credit history, with no outstanding debts.
We currently have a deposit of £25,000, but can go as high as £30,000 if necessary.
Around 2 and half years ago, I took out a £15,000 loan from Nationwide, as I found myself bogged down with payday loans etc, so I decided to consolidate several payday loans, with one large loan.
My credit scores across Experian, Equifax and Clearscore are rated excellent, and I have never missed a payment. I currently have £11,000 outstanding on the loan, paying £225.50 per month.
I have a Nationwide credit card with a maximum of £8,900, but the balance is £0.
I’m curious as to the effect a bank loan would have on a mortgage application? Naturally, I imagine that they are viewed more positively than a high interest payday loan, but the total amount outstanding is what’s concerning me.
My basic salary is £24,000, plus £4,140 car allowance, and around £4,000 commission, totalling to around £32,000.
My partners basic salary is £27,000, plus around £6,000 in overtime per year (NHS Nurse), totalling around £33,000.
My last payday loan was settled in January 2017, and none have been taken out since that payment.
We are looking to obtain a mortgage of £225,000.
Thank you in advance.
Darren.
Sara (Debt Camel) says
I hope you are going through a broker, not applying direct.
Some lenders these days are not counting any commission payments.
The large loan counts mainly as it reduces the affordability, as you have less income after paying the loan repayment.
Matt says
Hi
Do payday loans affect applications more or less on a help to buy mortgage?
I’m guessing just the same but just wanted any clarification…
Thanks
Sara (Debt Camel) says
Only a few lenders offer these mortgages. You need to talk to a broker that covers that area.
Ashley says
Hi,
I spent so long worrying about this nd thought I’d never get a mortgage. I bit the bullet ( last loan paid off may 2020) and years of pdl history ) and applied to Santander Long story. Short never questioned it and I’m now sitting in my own home :)
Sara (Debt Camel) says
Your last payday Loan was paid off 3 months ago and you got A mortgage? That’s very surprising…
Matt says
I borrowed off Fernovo and Cash4unow but I paid in monthly instalments. Are these classed as pay day loans still?
Why aren’t we told that getting a payday loan will ruin your chances of getting a mortgage…Don’t these companies have to tell us or is it in the small print?
It’s got to be worth complaining about and removing these pay day loans from my credit file. They have reduced my chances of getting a better deal, thus causing further financial hardship…
Sara (Debt Camel) says
If you have borrowed repeatedly from a lender, then put in an “affordability complaint”, see https://debtcamel.co.uk/payday-loan-refunds/. If you win any negative marks are deleted and some firms just delete the loans completely.
If you want to argue you should have been warned, I suggest you look at the each lender’s website and any marketing you had from them and see if you think it was misleading and explain that in detail.
Jason says
I have borrowed quite a bit over the last 3 years which is worrying me about apply for a mortgage next year.
These fall into 2 categories on my credit file.
1. Advance against income
2. Unsecured loan
Are these both considered negative towards applying for a mortgage?
Cheers
Sara (Debt Camel) says
Were all your repayments made on time?
Were any of them classed as payday loans?
Have you looked to see what your credit records actually show? See https://debtcamel.co.uk/best-way-to-check-credit-score/ for how to do this.
C says
Hi Sara,
My boyfriend and I are just about to start applying for a mortgage in principle and it’s terrifying me that I could have messed all our chances.
My boyfriend earns less than me but has a perfect credit record we are able to put about 15-20% deposit down luckily.
My last payday loans were repaid in February this year – with help from my parents. I have had payday loans on my credit file for the last 6 years – between being stuck in the payday loan cycle and gambling to try and pay off these loans (I currently have affordability complaints completed and about 10 come back upheld with lender) I have also got some outstanding with ombudsmen – one of which still has a balance but I have been told to not pay until we get a decision. Do you think I will have no hope whatsoever of a mortgage?
Sara (Debt Camel) says
I think you will have a lot of difficulty. Hopefully you will win some Ombudsman complaints and get defaults and possibly even the loans removed.
one of which still has a balance but I have been told to not pay until we get a decision.
who is the lender? how many loans did you have from them? who gave you this advice?
A says
I am in a similar situation with a number of PDLs. I took out Wonga, Sunny And QQ loans in 2017 and 2018 which I think were missold. Is there any way I can ask for these to be deleted from my credit file as this will help with mortgage applications? I haven’t had a PDL for over 2 years. I don’t know who to contact because Wonga has gone bust and I missed the deadline for claim for money back. I’m not as interested in money back and more interested in credit file deletion. How do I go about this and who do I get in contact with. Thanks
Sara (Debt Camel) says
It is too late to put in a claim to Wonga as you say, and there is no other way to get those loans deleted. But you can still make claims to QQ and Sunny even though they are in administration.
A says
Thank you. Would the financial ombudsman or any other entity have the power to be able to rule that my Wonga loans were missold even though the claim for reimbursement is too late? It just feels wrong that because a lender has gone bust there is no scope for the mis-selling to be written off and sticks for 6 years. Some say that if PDL has ever been taken out (even after 6 years) the black mark stays there forever. Would removing QQ or sunny have much of an impact anyway if I can’t get Wonga removed? So my question is does it matter whether I have one or ten PDL on my file? Because if there is still one the black mark will always be there? Thanks.
Sara (Debt Camel) says
No it’s too late.
S says
Hi, just wanted to leave a note here to give people some confidence that you can still get a mortgage with PDL history.
To give you some background, I got myself into a terrible mess with PDL’s, which I finally started addressing at the beginning of 2017, thanks to the guidance on this site.
In total, I received almost £29,000 in refunds for affordability complaints and the majority of entries on my credit file were removed, however, some were still recorded. Despite frequent chasers to those companies, and confirmation that the records had been removed, they were still very much there.
Fast forward to 2020 and we’re now on a position to buy our first home. I was very nervous about the PDL records and was concerned that would affect our ability to get a mortgage. I honestly never thought it would be possible, but we’ve just been accepted for an 85% LTV mortgage with a mainstream provider at a fantastic rate.
My recommendation to anyone looking to get a mortgage is to use a Mortgage Broker and be honest with them. Ours ruled out a few providers due to the PDL history and their requirement for only the most Vanilla of Customers.
Thank you so much to this site and Sara for all the guidance. This website has turned my life around, and that’s not an exaggeration.
Sara (Debt Camel) says
Well done – I hope your house purchase goes smoothly!
Tom says
Hi,
I am just looking for some advice. We are currently in the process of a mortgage application with Nationwide. We are “porting” my exsiting mortgage to save on the early repayment fees.
But have seen how payday loans can affect your application, which has got me worried now. I was not aware of this at the time and if I knew this, I would never of used them. My last PDL was paid off in April 2018. And have not had any since.
I earn a good salary of £65k, not including any overtime. I have paid all my debt and loans off early, and have been over paying on my mortgage for the past 10 months. All credit checkers say my credit score is excellent. And I have never missed a payment and always paid debt off in full and early.
My partner earns around £25k, with no debt. And very little outgoings. Again, we did not include any overtime or anything on the application.
We are looking to lend £330k, with a 15% deposit. Our AIP said we could lend £420k over a 12 year period. The application has been submitted to the underwriters and just taking a while.
I’m am just worried that the issue with PDL is going to set us back even though the last one was paid back in 2018. And even though financially we are in a excellent position.
Will this be an issue for me and has anyone dealt with Nationwide with regards to PDLs?
Cheers.
Sara (Debt Camel) says
As the last one was repaid over 2 years ago and everything else sounds good, I hope you will Be fine.
Matt says
Hi
I’ve successfully got 3 payday loan lenders to remove all loans from my credit file.
I complained that there was no warning that if I took these loans out, it would affect my ability to get a mortgage.
2 of these lenders I had previously won an affordability claim with. They still removed all the loans including the ones that were rejected in the claim :)
Sara (Debt Camel) says
Interesting!
Keith says
Hi Sara,
You mention that mortgage lenders do not see lender names on a credit search but a red flag against payday loans. Could you confirm if this is also the case for high interest ‘instalment loans’ and home credit loans?
Also is there a difference between what lenders see on a soft search compared to a hard search?
Thanks in advance.
K
Sara (Debt Camel) says
A lender who looks closely at your credit record may well be able to decide that certain loans were high credit by looking at the monthly repayments and the term, but so far as I know these loans are not flagged specifically.
If this is for a mortgage, all lenders would do a hard search.