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How best to improve ones credit-worthyness in preperation for a mortgage application?

Hi,

I consider myself fairly financially astute and have done well to manage my various accounts and credit cards over the last 5 years or so from graduation. I monitor my credit report on a 6 monthly basis and have no negative marks.

Myself and my partner have decided to leave it for one year to apply for a mortgage so we can build up our nest egg for a deposit and other costs associated with house purchases.

For the last few years I have been playing the stoozing game with cashback and 0% purchase cards, I would say I've had between 5 and 10 cards and still actively use my &more, Capital One and Amex Platinum cards, the rest I have cancelled. Mainly I use the Amex simply for the cashback. The other two I use every so often but don't leave it long before I do use them.

Will I be damaging my chances of mortgage approval with this amount of cards? They get paid off in full every month simply because their 0% deals have expired and to make the Amex beneficial I have to pay it off monthly. On average I have between £200 and £500 spread across them.

Are there any ways myself and my partner can increase our chances of being successfully accepted without hiccup for a mortgage application. I myself haven't been refused credit previously but my partner has on several occassions. We checked her credit report but there is nothing adverse, which has baffled us as she has has several mobile phone contracts and has a credit card that she manages very well.

Thanks in advance.

Mat

Comments

  • Joe_Bloggs
    Joe_Bloggs Posts: 4,535 Forumite
    I can't see anything wrong. There have been many who have been refused a mortgage because they have had an unintentional unauthorised overdraft incident. It might be an idea to get an overdraft facility in place and then to never use it.

    See what interest you can get for your savings from a variety of souces. Do not put all your faith in one bank. Fixed savings rates appear good when compared with variable ones. However there may be penalties if you have to pull the money out quickly.

    Egg might be worth considering. They do a 3.25% instant access current account (2% annual bonus) and their Egg Money World master Card gives 1% cashback. However there is a £1 a month fee for the card.

    I route my money destined to Egg and other saving products through a Halifax reward Current account. This has faster payments and gives a reward of £5 if you move £1000 or more through it. Halifax have some tempting savings rates too.

    J_B.
  • Framps
    Framps Posts: 71 Forumite
    Your credit score is driven by many factors - one of which is the number of credit accounts that you hold.

    Pre-credit crunch this was a marginal factor and of little consequence, however, this will now materially affect your credit score. That said the credit score is itself just one factor in the lender's decision to give you a mortgage - personally I think it's worth improving this as much as possible though, especially as it's something you can easily influence.

    Generally 1 credit account is considered optimal, 2 are okay, 3+ and you will be shifting into the average ratings, even if you have no black marks, such as missed payments and CCJs.

    Note - current accounts with overdraft facilities (including unarranged overdrafts) are considered credit accounts.

    To maximise your credit rating:

    - reduce your credit accounts as much as possible
    - make sure you are on the electoral roll
    - keep your applications for credit to minimum in the next 12 months (the closer to zero the better)
    - do not miss any payments!

    I was shocked when I applied for credit a few months ago and was turned down - historically my rating was excellent and was in the high 900s. I checked my score to find that I was an average risk and mid 800s - speaking to Experian they pointed out that I had four credit accounts (main current account, one dormant joint a/c, one live joint a/c, and one credit card paid in full each month). I closed the two joint accounts and am now mid 900s and a good risk. To get to the top rating tho I would have to close my credit card, but I use that for air miles so have kept it open. Reapplied for same credit and got throigh with no problems...
  • Joe_Bloggs
    Joe_Bloggs Posts: 4,535 Forumite
    This is a link to MSE Martin's article on credit scoring.

    J_B.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Cut back to one credit card. Cancel the accounts for the others.

    Save hard............
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