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Last Updated: Friday, 30 January, 2004, 07:15 GMT
Ask the expert: Poor credit histories
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A bad credit history may lead to a more expensive mortgage

I'm 30 years old and I'm looking to buy a house with my boyfriend. We have a little money saved for a deposit but we both have bad credit histories (from university and college days). My boyfriend has now cleared his debts and I have about 400 left to pay. We both work for the Civil Service and both our jobs are permanent. We each earn 12,100 a year. Is there anything you can advise us to do?

Name withheld

Ray Boulger, senior technical manager, Charcol:

The fact that you both have a bad credit history will not preclude you from getting a mortgage but it may mean you won't qualify for the best rates at the current time.

Although a 5% deposit may be adequate, you may need 10%, depending on how much adverse credit you have and how long ago it was incurred.

Mainstream lenders will look on your application more favourably if the remaining 400 of the outstanding debt has been cleared and therefore I would recommend paying this back as soon as possible.

You say that the adverse credit was incurred when you were both at University/College. As you are now 30 I assume these debts were all incurred several years ago.

Do you have a question?

If this assumption is correct and you wait six to 12 months after you have paid off the remaining 400 before applying for a mortgage, and assuming all your other financial affairs are in order, you should be able to get a mortgage on normal terms from some lenders.

To improve your chances I would recommend that you make sure you operate your bank accounts in credit, or within any agreed overdraft facility, with no bounced cheques or failed direct debits.

Make sure the monthly payments on any current loans or credit cards are always paid on time. You should also both make sure you are on the electoral roll.

If neither of you have a credit card your boyfriend should get one, perhaps from his bank, and put at least some of his normal expenditure on it but pay the balance off in full each month.

This will avoid any interest being incurred but will establish a credit record, which will be helpful when applying for a mortgage.

The most you are likely to be able to borrow is around 72,000 - three times your joint income - although many lenders would offer less than this.

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.



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