Does Credit Card Debt weigh more than loan debt when applying for mortage?

Fjords

Hello,

I'm looking at getting a mortgage but I have some debt on credit cards and on loans.

I've recently been paid a good company bonus and want to pay off some of my debt.

I can pay off one of my loans thus significantly reducing my monthly outgoings or I can pay off one of my credit cards but my monthly outgoings will then be higher than if I paid the loan. I KNOW the cheapest option in the long run would be to clear my credit card.

However, I'd like to have a smaller monthly outgoings.

How does banks score this when applying for a mortgage. Does credit card debt count more negative than bank loan debt?

PS! The deposit is being paid by my father in law. I have a very long post about this with loads of helpful info (search my name) so this post is solely about what weighs more, CC debt or bank loan debt.

Thank you

mr_mortgage

Credit card debt is revolving credit, so even if you have no outstanding balance - you still have the facility up to the credit limit. Most scoring mechanisms I have come across will therefore assume that you may use up to the limit of your card.

e.g. if you have 5k loan, that may well be viewed better than a credit card with a 10k limit, but a balance of 0. However, this may not be the case every time - scoring mechanisms may allow for a CC with a reasonable limit and not score too negatively.

My advice would be to talk to the mortgage advisor at the bank (or broker) through which you are applying. They will want to make the sale, so will help you make the right decision based on the mortgage and bank/BS you are applying to.