A couple of years ago I took out car finance, unfortunately over the last 7-8 months I've defaulted on payments for other things, catalogues and stuff. Never on the car. I've always caught up just made them late. I tried to get a mobile phone last month and I was declined......bad credit obviously. The car finance is due to end soon, once that's paid in full with my credit rating go back up?
Probably not immediately. The missed or late payments will remain in your file and lenders will take them into account. The depending on the value they will impact less as time goes on. The end of the car loan may improve any affordability calculation as you will have more disposable income but as above it will take time for this to counteract the poor payment history.
All lenders are different however so it's not possible to be 100% on the reason for the decline. If you are financially stretched this will probably be having an impact too.
The defaults will stay on your credit file for 6 years from when they are settled.
The more time that passes, the less some lenders are concerned by them but in the short term your credit rating won't improve just because the car finance is paid off- that's not the account with defaults.
A late payment isn't a default but will be showing as 'one down' that is missed. Even when caught up the fact it was late that month will remain in record. For most revolving credit accounts i.e catalogues that will be for three years.
It could well be affordability that is the issue. If you do not appear to have any free income each month after existing commitments and standard deductions for cost of living then the missed payments might have nothing to do with it. Particularly if small value or catalogues and you were never more than one down.
Also have you used any pay day lenders for short-term borrowing? That is a massive red flag for many lenders and would rule out further borrowing for 6 to 12 months depending on lender & product.
Lenders make assumptions on your income based on the data in your credit file- having late payments on your record will make the lender assume you are either just really bad at organising your finances or that your outgoings exceed your income- neither of which I'll make them want to lend to you.