bad credit rating because I don't have much credit?

neverdespairgirl

I checked my credit history on checkmyfile.com. It said there was a problem getting records from Experian and Equifax, but nothing to worry about, this happens 10% of the time and they'll sort it out.

It showed my callcredit, I think it was called, file. That showed my Barclaycard, mobile phone, and a credit card I opened in Dec 2000 and shut in March 2003. It doesn't show another credit card I still have, an MBMA one I've not used for a while. It said that as I had zero credit searches on my account for the last year, this damaged by credit rating.

Why does this damage it? And what can I do about it? At the moment I just use either my debit card or my Barclaycard to pay for things (and pay the BC off every month). The file shows I pay my BC and mobile bill every month without fail, and also paid the now-closed credit card every month without fail apart from 1 late monthly payment 5 years ago. So doesn't this show I'd be a good risk for the mortage my partner and I are considering getting?

Any ideas? I would have thought not having much credit and paying off the ones I do have regularly was a good, rather than bad, thing!

neverdespairgirl

Thanks, that's very kind of you. My partner and I are looking into buying our first place at the moment, and I decided to check my credit file before we applied to check that nothing erroneous had somehow crept in.

I agree with you - it's a mistake to buy things you want but don't need on credit. My partner and I don't have a lot of "stuff" in the TV and DVD and gadget line, we'd rather have our own place and be able to go on holiday etc! I know my partner will have a similar "problem" wiht his credit file in that he has a mobile phone contract he's had for ages, a barclaycard he's had for ages too, and that's it.

We have a biggish deposit, and don't want to borrow a large multiple of our joint income (we don't want to overstretch ourselves) but I suddenly got worried they'd turn us down because we don't borrow all the time!

I'll take your advice about seeing a broker rather than just a High Street bank, thanks for that. It would probably be a good idea anyway as we are both self-employed.

homersimpson_3

So doesn't this show I'd be a good risk for the mortage my partner and I are considering getting? Any ideas? I would have thought not having much credit and paying off the ones I do have regularly was a good, rather than bad, thing!

When you apply for mortgage bank look at all circumstances not only credit search. Banks often deduct amount of debts -whether credit cards or any form- from amount they are prepared to lend you. It helps if you have savings, and show that you save regularly .
I was given mortgage even though no credit searches done for years. Didn't even check my credit rating before applying for mortgage.
When you go to bank be totally honest and take all necessary paperwork. You need to prove to bank you are responsible and can manage money i.e.not continually overdrawn & can repay the debt. Why should a bank lend you their money if they don't think they have any chance of getting it back? It also helps if you had same current account for at least 6 months - don't play too much with accounts when applying for mortgage to get the freebie money (e.g. £50 from bank x and then change it because bank y have a deal for £100 if you open it with them. wait until you get mortgage then go for deals)

miaxmia

When my son was looking at renting a place, he asked if we would act as guarantor as he had never had anything on credit before so he had been told he was unlikely to get accepted - all went through fine and we didn't have to act as guarantor. Then, this year my daughter decided to buy her own place with her self-employed partner - again my daughter doesn't even have a contract mobile phone so has absolutely nothing to judge her credit rating and other people said it wasn't good she didn't have a credit card because she would have no credit rating and the only thing her partner has is a mobile phone contract - no problems getting a mortgage (through a broker) - the only problem they came up against was the fact that her partner was self-employed and didn't have 3 years worth of books - but they got there in the end.

homersimpson_3

the only problem they came up against was the fact that her partner was self-employed and didn't have 3 years worth of books - but they got there in the end.

It's often difficult (though not impossible) to get mortgage when self employed. Banks can't judge how responsible you are with money or likelihood of repaying debts if little/no books (no paperwork on which to base decision). Most (though not all) banks err on side of caution. Understandable- given they are lending their (or investors) money. Some banks now have mortgages designed specifically for self-employed. May be worth considering if people find themselves in this position.

neverdespairgirl

Thanks all. My partner and I are both barristers, and we bank with the same bank (and have done for years) because Lloyds Law Courts branch handles loads of barristers and is pretty helpful. I know my parents' mortgage is through Cheltenham and Glos, my Dad's self-employed too.

I hope the fact we'll have approx. 30% deposit will help with getting a mortgage even though we're self-employed. I have 3 years of accounts now, my partner only has one.

miaxmia

neverdespairgirl wrote:

Thanks all. My partner and I are both barristers, and we bank with the same bank (and have done for years) because Lloyds Law Courts branch handles loads of barristers and is pretty helpful. I know my parents' mortgage is through Cheltenham and Glos, my Dad's self-employed too.

I hope the fact we'll have approx. 30% deposit will help with getting a mortgage even though we're self-employed. I have 3 years of accounts now, my partner only has one.

My daughter and her partner got turned down by Alliance and Leicester because of the self-employed status, but they would have accepted them if they had had a big deposit like yourselves, so you should be fine. Unfortunately, in my daughter's case it meant they had to take on a mortgage at a slightly higher interest rate but, as I say, A & L said if they could put down, I think, about 25%, then they would have given them a mortgage. With her partner only having one year's worth of books, it just meant they had to produce 6 months instead of 3 months of bank statements and accounts of the business.

JustTakeAllMyMoney

Best thing a self employed can do regarding mortgages is go to a independent broker (who doesnt charge you) that speaclises in the self employed / contract market. If you find a good one they know who the lenders will and wont accept based on the applicants circumstances.

Different lenders look for different things, some want to see accounts for the last 3 years, some are happy to just see some accounts and a projected revenue figure from an accountant. They all vary and the brokers know that so do the leg work for you :0), I went through a broker called 'ContractorFinancials', got a good rate from a lender who I wouldnt have approached before as I didnt think they would lend to me.