Guidance/Advice

ukman2012

Currently, I'm in the process of trying to borrow more money to renovate my house by adding it onto my current mortgage. Over the past few weeks, I've noticed that my credit score is good to almost excellent on all other agencies like Equifax and TransUnion, except for Experian where it is labelled as fair, only 18 points away from being considered good. Most of the information on Experian isn't as up-to-date as it is on Equifax and TransUnion, especially regarding details like credit limits and balances. The only negative mark on Experian is that I opened a credit account in the last six months, specifically in February.

Using Experian's score simulator, it tells me that if I take out another credit card, given that my credit limit across four cards is already almost £30,000, I can't keep applying for credit cards.

However, where I need advice the most is regarding one of the credit cards, Fluid, that I have, which has a balance which currently has a 40% utilization rate and carries a high APR. I've also got a 0% interest card for 18 months with NatWest, but it has a 65% utilization rate. The issue I'm facing is that my affordability score dropped below 80% due to too many transactions in and out of my linked account, so i am for the moment, trying to restrict the number of transaction out of my account at least for the month and use my saving and other accounts to cover bills.

As mentioned before, by using the score simulator, it shows that if I pay down the fluid card with the high interest rate, my score would improve significantly. So, would it be best if I pay down my fluid card by transferring the balance to my NatWest 0% card, even though it would take it above a 70-80% utilization rate? Once I am able to secure hopefully the additional lending, I can then pay down the NatWest 0% credit card balance to zero.

Apologies for the rant.

Gandalf644

ukman2012 said:

Currently, I'm in the process of trying to borrow more money to renovate my house by adding it onto my current mortgage. Over the past few weeks, I've noticed that my credit score is good to almost excellent on all other agencies like Equifax and TransUnion, except for Experian where it is labelled as fair, only 18 points away from being considered good. Most of the information on Experian isn't as up-to-date as it is on Equifax and TransUnion, especially regarding details like credit limits and balances. The only negative mark on Experian is that I opened a credit account in the last six months, specifically in February.

Using Experian's score simulator, it tells me that if I take out another credit card, given that my credit limit across four cards is already almost £30,000, I can't keep applying for credit cards.

However, where I need advice the most is regarding one of the credit cards, Fluid, that I have, which has a balance which currently has a 40% utilization rate and carries a high APR. I've also got a 0% interest card for 18 months with NatWest, but it has a 65% utilization rate. The issue I'm facing is that my affordability score dropped below 80% due to too many transactions in and out of my linked account, so i am for the moment, trying to restrict the number of transaction out of my account at least for the month and use my saving and other accounts to cover bills.

As mentioned before, by using the score simulator, it shows that if I pay down the fluid card with the high interest rate, my score would improve significantly. So, would it be best if I pay down my fluid card by transferring the balance to my NatWest 0% card, even though it would take it above a 70-80% utilization rate? Once I am able to secure hopefully the additional lending, I can then pay down the NatWest 0% credit card balance to zero.

Apologies for the rant.

Don’t get hung up about credit scores from the credit reference agencies. They are just made up numbers which have no bearing on whether or not an individual bank will lend. You may as well substitute the CRA scores with lottery numbers! The same applies to the ‘score simulator’ – it is just a made-up fantasy thing.  

Just make sure your credit history is correct.

I don’t think the actual number of transactions has any bearing – it is whether you pay off the card every month on time and do not exceed your credit limit etc that matter. 

As for your current cards, if you can, transfer as much of your high interest card balance to a cheaper APR card, then do so. A 0% interest card certainly out-trumps a high interest one. If you then have cash funds available, pay off the residue of the high APR card.

Again, don’t get hung up about utilisation, but do not exceed your credit limit – if possible leave a small buffer in case of any unexpected or forgotten things that may get statemented.

Just make sure you have a plan to pay off the credit card before the 0% interest offer ends as you cannot guarantee that there will be further 0% cards on offer in the future.

 

Brie

If you pay down the Fluid card by any method currently available and then close it I suspect you will be in a much better situation should you wish to extend your mortgage for renovations.  I don't think you will do yourself any favours if you tell a bank you will use some of the money to pay down credit cards as they might consider that a red flag.  They will want to be assured that you can pay both the larger mortgage AND  all the cards at full utilisation so if you can get rid of some of the available credit on them they are likely to be happier.