FTB Mortgage; Something on credit or Credit card??

ben1985

Hello,

My lodger has approached me about buying my flat, it appears he thinks lodging is a waste of money and even though I explained owning a property will cost more he says he would rather have it that way.

What he asked me to do was work out the best way to improve credit score.

I did phone up the council and put him on the electoral register in November and they mentioned he would be on from January, I applied in August and was only from December they said.

So he's on the register, besides that he's never had credit in his life, no overdraft or nothing, so what would be the best steps to give him the best chance of obtaining a mortgage as he's really get his heart set on buying.

Would it be to apply for a credit card with his bank? He's being with them for 8 years (so he says) so is that likely to happen? or would it be better to get something on credit (say from an electrical store) and pay that off as to create a good credit history?

I'm not an expert myself so that's why I'm asking you knowledgeable people on here.

As I mentioned he's already on the electoral register so what would be best? Credit card or credit on an item, or is there anything else what would boost his score?

Regards

BW

BenS1

To be fair, it would be best to get one of the high interest cards (Capital One, Vanquis) and use it on small amounts and pay off the outstanding balance off every month. Just don't miss any payments and he'll get some good history

Does he not have a mobile phone contract?

ben1985

Hi,

No, he only has PAYG phone and doesn't think he wants to switch from that.

He's wanting to buy before christmas is out apparentley, he received some money from his grandad (part of will) so he has 10% deposit amount-ish

Here's a question, say from actually receiving the credit card and spending on it and full re-payment each month, how long would it take before actual successful 'activity' showed up on his credit history?

Regards

BW

Yorkie1

I imagine it's finding the right balance between not taking out too much credit that he's viewed as a poor risk, and having a sufficient track record with credit to prove that he's a good risk.

Just a salutary tale - it's not always easy to predict how you'll be viewed.

My brother wasn't viewed as top whack credit risk (is that A grade?) despite the following points in his favour: professional with permanent job and decent salary, credit card for 10+ years paid off every month, long term address on the electoral roll, no adverse credit at all. But because he'd not had to rely on credit for living he didn't have a sufficient credit score with a mortgage company

ben1985

Yeh I see what you're saying and you're right. I think the best bet for time being is to apply for a credit card with his bank, buy a few items and full re-payment each month, it surely has to do some good and won't certainly do no harm.

benjo

Perhaps best for him to pull and check his own credit file before he jumps in and makes credit applications - there may be nothing wrong with it at all.

I applied for and got a mortgage in April last year, I hadnt had a credit card in years.

In terms of getting a mortgage and how good does his credit file have to be - well it's as long as a piece of string....

If he has a 40% deposit, stable job and no ccj's/defaults, then the fact he doesnt have a credit card wont make much difference (or so it was explained to me).

If he has a 5% deposit, then his credit file will make a big difference.

housesitter

I'd wager the best offer he is going to get is from the bank with which he has had 8 years worth of business.
I'd start by asking them for a quote and see if the aspirations are at all realistic.

Johnnywelsh_2

3 years ago I didn't have a credit rating. My mortgage company tells me i'm an A band now. I got a mobile contract on my mothers name for the first 3 months paying on time then switched it over onto my name. The only other things I've ever borrowed are student loans which come out of my wages before I get them. Never had a credit card or anything.

I'm also on AOL broadband £10 a month and Sky for past 4 months. All paid by direct debit. So it's either AOL, Contract Phone or Sky (or all 3) that has given me that A band credit rating. Hope this helps.