6 years left on mortgage but bad credit rating

tony4321

1. Was looking forward to being mortgage free well before retirement age

2.Been refused £150 overdraft by the bank I have been with approx 20 years - wage paid in all this time - mortgage with them - household insurance with them

3.No other loans/ credit cards/ store cards. Most puzzling, my credit report I have obtained is rated as 'all green'

4.This scares me as I have presumably a bad credit rating so may be unable to obtain a mortgage in future (you never know)

Question is;
Do I try to hang on and extend my mortgage to keep me in a credit worthy positition or (as I was hoping) pay it off soon?
Thanks for any advice

GMS

You may have a low credit score due to lack of activity on your credit report, i.e no credit cards or loans etc.

A £150 overdraft may have been refused purely due to it being a small amount and therefore no money in it for the bank.

If you have had a copy of your credit report and there is nothing showing in the way of CCJ's or defaults you do not have 'bad' credit. Credit scoring makes decisions for banks unfortunately.

If you can pay your mortgage off sooner then you should do. Rather than extend the mortgage in an attempt to build credit score you may be better with a credit card. Clear the balance in full each month. Use if for small purchases and build credit score that way.

tony4321

GMS wrote: »

You may have a low credit score due to lack of activity on your credit report, i.e no credit cards or loans etc.

A £150 overdraft may have been refused purely due to it being a small amount and therefore no money in it for the bank.

If you have had a copy of your credit report and there is nothing showing in the way of CCJ's or defaults you do not have 'bad' credit. Credit scoring makes decisions for banks unfortunately.

If you can pay your mortgage off sooner then you should do. Rather than extend the mortgage in an attempt to build credit score you may be better with a credit card. Clear the balance in full each month. Use if for small purchases and build credit score that way.

Thank you for this^ Looks like a credit card is the way to go. I have been living in the dark ages and refused all offers of a credit card for the last 10 + years - so, time to bite the bullet as they say

Joe_Bloggs

@tony4321
I would be very upset if my long standing bank account refused an overdraft request for only £150. I would want to know why?
An overdraft is an important backstop in avoiding bank charges.

If you have held these accounts for a long time then they may not be reported to the credit reference agencies. This may harm your chances of getting a prime credit card. I would be wary of applying for credit cards if a refusal would hurt my chances of future success.


Are you getting the most for your savings ? Are they with the same bank ? You tend to get better treatment as a new customer than an existing customer given the bonus culture.

I have tended to widen my financial dealings/get better value by initially opening savings accounts/cash ISA with other institutions. This tends to ironically create invitations for loans as well as credit cards and current accounts.

I limit my credit card purchases to money that I can match in savings accounts so there is little risk of overspending or paying any credit card interest.

J_B.

tony4321

Joe_Bloggs wrote: »

@tony4321
I would be very upset if my long standing bank account refused an overdraft request for only £150. I would want to know why?
An overdraft is an important backstop in avoiding bank charges.


If you have held these accounts for a long time then they may not be reported to the credit reference agencies. This may harm your chances of getting a prime credit card. I would be wary of applying for credit cards if a refusal would hurt my chances of future success.


J_B.

Joe - I was indeed very upset. It even went to an 'appeal' to the underwriters & still refused!
The bank have already offered me a credit card after my overdraft refusal but I declined as this was not what I asked for. I am so frustrated with them (not the first issue I've had with them) I am seriously considering switching, although the more I speak to people/ read about other banks it makes me think they are all as bad as each other. I think the days of helpful banking are long gone!

latecomer

take the credit card provided they guarantee you will accepted, then consider if you want to change bank. There is no loyalty from banks so dont show them any.

if you dont already use direct debits to pay for utilities then this can also help building credit ratings.

tony4321

Thanks latecomer - I agree there is no loyalty from banks, as I have found out. I have been told I have been 'authorised' for a credit card so presumed it was a given. If it is I will take it.
How long(ish) would I need to use it before I switched banks?
PS I have also been using DD's for many years to pay my utilities