Credit Card balance affect mortgage application?

danielanthony

Hello,

I've been working hard to get my credit file sorted in order to get a mortgage and shortly all my defaults will be removed.

However, I've been reading that having a high outstanding % on credit cards will hamper my mortgage finding efforts. My details are:

CC1: £3600 balance £7000 limit
CC2: £3900 balance £4000 limit

I am paying CC1 off 1st before hitting CC2 but only CC2 shows up on my Experian credit file. So if a lender checks Experian only then they will see I'm using 98% of my available credit when, in actual fact, it is more like 65%. I have never missed a payment on either card.

Is this a big problem or am I too paranoid?

Thanks,

Dan

dimbo61

What happens if they check another credit agency and find out you have not given all the info they have requested IE total outstanding debts.
Mortgage application turned down and no home!
Clear both credit cards asap

danielanthony

I'm not saying that I'm trying to hide my debts, I'm saying that if I have a high % balance on one card and a modest one on another how will this be seen? I cant believe that having a credit card balance means you cant get a mortgage which is what you seem to be implying.

Rossa_3

Having a credit card can affect whether or not you get a mortgage as the underwriter will use your credit file (there are 3 credit agencies) to see if you are a good risk. Though it is only one factor in the decision it is a major one.

As long as you are up front and give the details then you should be ok. If there's a discrepancy they will ask why or decline with no reason. The lender needs to know you can afford the repayments and if you are only making the minimum repayments each month that can count against you. However all that may happen is that they increase the amount of the interest rate on the mortgage deal which is a reflection on what level of risk they think they will be taking with you. That's all an underwriter does, manage risk for the lender. It is business not personal.

BTW your credit file is updated monthly so what the underwriter gets depends on when in the month your mortgage application is processed. All lenders are linked in to the credit ref agencies via computer so it's automatic.