Getting a mortgage after poor credit

[MoveAlongNow]

My mother has just let me know that my father had invested money which she can now access, and she wants to gift my sisters and I around the equivalent of £14K each (she is not in the UK, so different currency). This is amazing, as I had no idea there was any money and never expected an inheritance. I am overwhelmed. It feels as if my father is still helping me, which is a gift in itself as we lost him very young.

I think it is enough money to pay off my CC debt and have a 10% deposit for an average, 2-3 bedroom house around here. I am 35 and my partner is 42, and it feels like our last and only chance to get a mortgage.

The only problem is my credit rating is not great. Slowly moving above 'poor' following some missed CC payments when unemployed a few years ago. How much will this hurt our ability to get a mortgage? I will clear all debt immediately, does this make a huge difference or is it still a matter of give it time? Our joint income is 42K, but most of that is my partners wage.

Thanks for any tips!

You can turn your credit rating around pretty quickly. I turned mine from poor to good in 6 months.

Can I ask how you managed that NoArmani?

Paid down credit card debt very quickly, then used card for small purchases and made sure the balance was cleared before the next statement came in.

Apply with one of those credit score companies and see what your score is from there...first month is free but remember to cancel after that. If you do clear CCs then also make sure you close them down as keeping them open even with a balance of 0 has an effect on your score ( you can always re apply for one once mortgage is sorted) It does not take long to improve your rating. Mine was shocking due to missed payments and also several cards that I had cleared but not closed down so it looked like I had lots of debt! It took several months but I got there and got the mortgage and then house of mydreams. May also be worth speaking to a mortgage broker as they can find a good deal depending on your current rating etc.

Good luck

The best thing to do is find a Mortgage Broker who should be able to help you and will know all the sub-prime lenders who are willing to overlook a few missed payments.

Although how old are the missed payments? If they are getting close to the year time limit they will disappear from your credit file very soon, so you could save the money for a year or so (lock it away if you feel you may be tempted to spend it) and then you may be able to get a mortgage with a high-street lender, where the rates will be lower.

You can turn your credit report round quickly as above. However, a few missed cc payments shouldn't really make it poor unless they're consistent and recent. It seems to be more likely that you you don't have good news on your file? Ultilities, a bank overdraft, mobile phone contract will all appear ok your file and be reported as satisfied every month if you have them and pay them. Most mortgage lenders look at 3 years data.

And yy paying off those cc and closing the accounts will improve your credit scare drastically the month you do it and the few months after. Timing is everything. Check credit score by joining experian and equifax and call them and ask them what they would advise to improve it

Oh thank you for all of the replies! I forget to check for a few days, hope I don't look rude in not replying . My rating plunged from good to poor very quickly, following a period of unemployment where I missed 4 months payments. I was close to a dmp, but am so glad I didn't go down that route.

Isabella - I did not know missed payments disappear after a year - that would be amazing!! I agree though, a mortgage broker will be my next move once the debts are cleared.

So everyone's general advice is to close the accounts? I thought maybe keeping them open would look better as showing more available credit is a good things - have I got that wrong? My plan was to pay off the CC debt, then use the card to make small purchases that I pay in full each month. Am I on the wrong track with that one?

Thanks again for your help

Missed payments don't disappear after a year- they stay for 6 years.

I wouldn't close all the credit card accounts as it is good to show you can manage them properly by clearing the full balance each month.

Have a chat with a broker, they should be able to find something for you, especially if you could stretch to a 15% deposit.

Gosh sorry, I am missing the number 6 in my sentence . It should read 'If you are getting close to the 6 year time limit'.

They stay 6 years but most lenders only look at 3 (sometimes 2) years data. Agree keep them open. The reason for your poor credit seems to one event where you missed payments quickly. This is ok as it means you can recover it quickly too.

One thing to bear in mind- lenders see your report- not your "score" or "good/bad" status. They have their own criteria and score you on that. So don't get too wrapped up in having a score of 876 or whatever

Oh, 6 years boo... that's what I thought. sigh. never mind, I got myself into a mess but I will get out of it too! If the lenders only look at 2 years I would be okay.

Thank you all again. Any top credit buildings tips will continue to be welcome as I march along this path to credit recovery!!

I got a mortgage in 2012 with some missed payments from 2010..