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  • FIRST POST
    • Katiebrown
    • By Katiebrown 11th Nov 17, 1:30 PM
    • 1Posts
    • 0Thanks
    Katiebrown
    Am I best to clear credit cards with loan before or after applying for mortgage?
    • #1
    • 11th Nov 17, 1:30 PM
    Am I best to clear credit cards with loan before or after applying for mortgage? 11th Nov 17 at 1:30 PM
    Hi,
    I have 3 credit cards with totalling balances of 15k. The combined credit limit is 31k which is marking a negative on my credit score. I'd like to clear the cards with 1 loan for 15k for both lower rate and convenience but I'm planning to move house (I already own my property with a mortgage) and wonder am I best to clear the cards and obtain the loan before or after the re-mortgage/ house move? Will it benefit my credit score to sort the cards first leaving me in a better position for the mortgage?
    Thanks
Page 1
    • Gary_Dexter
    • By Gary_Dexter 11th Nov 17, 3:39 PM
    • 68 Posts
    • 45 Thanks
    Gary_Dexter
    • #2
    • 11th Nov 17, 3:39 PM
    • #2
    • 11th Nov 17, 3:39 PM
    Who knows - since the score is irrrlevant.

    No on sees the score but you - what is relevant however is the data on your file.

    Would you take a secured or unsecured loan?

    Also applying for the loan will add a hard search on your file
    • Sncjw
    • By Sncjw 11th Nov 17, 3:48 PM
    • 1,465 Posts
    • 870 Thanks
    Sncjw
    • #3
    • 11th Nov 17, 3:48 PM
    • #3
    • 11th Nov 17, 3:48 PM
    Also applying for a loan will double the debt. They will treat it as 30k when you apply for the loan as no garuntee you will pay the cards off with the loan
    • Superscrooge
    • By Superscrooge 11th Nov 17, 8:34 PM
    • 902 Posts
    • 627 Thanks
    Superscrooge
    • #4
    • 11th Nov 17, 8:34 PM
    • #4
    • 11th Nov 17, 8:34 PM
    Paying off some of the debt will improve your mortgage chances rather than just shuffling the debt from one lender to another.
    • Sarastro
    • By Sarastro 11th Nov 17, 9:44 PM
    • 224 Posts
    • 160 Thanks
    Sarastro
    • #5
    • 11th Nov 17, 9:44 PM
    • #5
    • 11th Nov 17, 9:44 PM
    Also applying for a loan will double the debt. They will treat it as 30k when you apply for the loan as no garuntee you will pay the cards off with the loan
    Originally posted by Sncjw
    Unless of course she does pay them off in which case they won't be there.

    Advice above is sound though, paying the debt off will be more effective in improving your credit score than moving the debt around.
    • venison
    • By venison 11th Nov 17, 9:52 PM
    • 1,285 Posts
    • 1,376 Thanks
    venison
    • #6
    • 11th Nov 17, 9:52 PM
    • #6
    • 11th Nov 17, 9:52 PM
    Depending on your income you may fail an affordability test for the mortgage anyway, your best course of action will be to try as hard as you can to reduce your level of CC debt
    I am now a Board Guide on the Credit card board and the Loan board and Benefits board (But give me time to learn the ropes thanks).
    • Gary_Dexter
    • By Gary_Dexter 11th Nov 17, 9:58 PM
    • 68 Posts
    • 45 Thanks
    Gary_Dexter
    • #7
    • 11th Nov 17, 9:58 PM
    • #7
    • 11th Nov 17, 9:58 PM
    Buy why are we advising to improve the score?

    The advice should be to reduce the debt to credit ratio
    • dj1471
    • By dj1471 11th Nov 17, 11:41 PM
    • 906 Posts
    • 600 Thanks
    dj1471
    • #8
    • 11th Nov 17, 11:41 PM
    • #8
    • 11th Nov 17, 11:41 PM
    Credit scores are irrelevant, every lender scores differently. Having 15k of debt will reduce the amount a mortgage lender will give you, this should be your main concern.

    Applying for a loan (or any kind of credit) prior to a mortgage application is ill-advised. If you can't afford to clear the debt it'd be better to extend the new mortgage to pay these off, if possible, as this is likely to be cheaper than a loan.
    • Sncjw
    • By Sncjw 12th Nov 17, 2:46 PM
    • 1,465 Posts
    • 870 Thanks
    Sncjw
    • #9
    • 12th Nov 17, 2:46 PM
    • #9
    • 12th Nov 17, 2:46 PM
    She would be doubling the debt as thats what the lenders would be assessing her on to see if she could afford repayments
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