Denied mortgage due to credit rating?!

Bigjackbauer

Hi there, thanks for reading. I have sold my house to a relative and have the 10% deposit required for our new home. We have used a mortgage broker that I used when I initially bought my first property and it seemed we would have no problem getting a mortgage agreed.

We both work full-time in good jobs that are stable, have a good wage between us, no kids and the only debt between us is a loan that I took out for my car on which I owe a small amount of money before it is paid off. The mortgage we are seeking on the new property is double our yearly (combined) salary and hence is well within our means.
Unfortunately, we have been turned down by the first lender our broker applied to on the basis of my partner's credit rating. She has never taken a loan, only has one direct debit - a mobile phone on contract - has never been late with payments on her overdraft (from when she was a university student and which is fully paid off) and has a credit card with her bank which she has never used. I'm under the impression that because of this and the lack of debits etc, she probably has hardly anything on which they can actually rate her?

My own on the other hand - I've taken a couple of loans over the past eight years which have all been successfully and quickly paid off, a mortgage, direct debits for various things and a credit card that has been used a few times and immediately paid off, I actually apparently have a good credit rating.

It seems ridiculous that we should be declined on the basis that my other half has never needed direct debits or loans in the past. Is there anything we can do QUICKLY to remedy this and do we have good grounds to appeal?

Wutang_2

Have you checked your equifaxs and experians?

Bigjackbauer

I haven't I'm afraid, I don't know what either of them is to be honest. I didn't see us being declined to be honest - then again, neither did our mortgage broker who said we're pretty much ideal for them - very low risk etc.

beecher2

Have a look here http://www.moneysavingexpert.com/loans/credit-rating-credit-score
There may well be a problem with your gf's credit file which you don't know about.
Don't mortgage advisers check the credit files?

Wutang_2

Bigjackbauer wrote: »

I haven't I'm afraid, I don't know what either of them is to be honest. I didn't see us being declined to be honest - then again, neither did our mortgage broker who said we're pretty much ideal for them - very low risk etc.

Get them all for free and see if they're all ok

Bigjackbauer

I've checked mine - it appears to be in order - no late pyaments etc, never in arrears. I'll get my other half to check hers when she gets home.

Mobility151990

not having and using credit works against you obviously, if a lender can't see how well you've managed credit in the past how do you expect them to lend? can't just go off yours.

debsinbrighton

can you get the mortgage on your income alone? then they won't need to credit check her.

Conrad

Bigjackbauer wrote: »

It seems ridiculous that we should be declined on the basis that my other half has never needed direct debits or loans in the past. Is there anything we can do QUICKLY to remedy this and do we have good grounds to appeal?

Talk to the money markets. Investors that supply lenders and also the insurers of lenders loan exposure do not want 90% borrowing on thier balance sheets.

Under new rules lenders must also retain a much larger sum of capital in reserve (ie dead money they cannot lend), for higher loan to values.

90% lending is therefore reserved for very specifi categories to make lenders insurance cheaper - and one dicdat is that the borrowers must demonstrate the ability and propensity to pay by way of a fair bit of past credit repayment.

luckyfool

Going to a single applicant may also not help. I was talking to a business development manager from one of the big high street lenders recently, and she noticed that recently literally every single application by her her brokers at 90% with only one applicant was being declined, whereas joint applications were still being accepted at about 50-60% (which is typical at 90%). They had obviously done something weird with the credit score to penalise single applicants at very high loan to values.

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To the OP - are you both on the voters roll? Some lenders will always decline an application if an applicant has no credit AND is not on the voters roll.

Bigjackbauer

Thank you for the replies. We're both on the voters register and managed to get a little bit more information regarding why we were rejected for that particular mortgage. Basically, by their manager's admission, their credit scoring is outdated and ridiculous. Not much consolation as they did not offer to change or challenge it.
My credit rating was apparently absolutely fine but my girlfriend's was near enough non-existent having never taken a loan before, not having direct debits etc. Getting it purely in my name was a distinct possibility but we'd rather not as we want it to be OUR mortgage, as ridiculous as that may sound to some. My sister - who is buying my house on her own - was immediately accepted for the 90% mortgage she applied for - yet same as my other half, has never taken on a loan and has no direct debits - plus both are on a similar wage, both in secure full-time employment etc. Cannot figure it out! Seems very inconsistent.
We've only been rejected for one particular mortgage - touch wood - so have therefore (via our mortgage advisor) applied for another very similar one but with a different company / building society. Hopefully we'll be successful with that one. We've only asked to borrow double our current yearly income over a twenty five year period so we're not asking for anything ridiculous.