FTB - Query about credit report

AlexandraF

Hi everyone...

Just hoping to receive some advice regarding a credit report that I received from Call Credit yesterday. To give some background...myself and my partner are first time buyers and have received a AIP from Halifax regarding a property that we have had an offer accepted on. The purchase price of the property is £135,000 and we have 10% deposit.

My boyfriend has never had any sort of debt and if on occassion he has used his credit card (only for small purchases, probably once or twice per year), he will clear the balance in full the following month.

When I was in my early 20s, I obtained a loan in order to pay for a Masters Course. I also had a student overdraft/credit card with HSBC and a car on HP. All payments were up to date and never missed. This was around 2004. After I left University, I obtained a consolidation loan and never missed a payment on that either and the balance was paid in full approx 3 years ago. Before obtaining the consolidation loan, I was in the habit of transfering the balance of the HSBC credit card to 0% deals. This has meant that I have probably had approx 4 credit cards registered in my name, all of which have never been used apart from to transfer the said balance.

Since paying off my consolidation loan (approx 2008), the only form of credit that i have had is a topshop (santander) card and the last time this was used was possibly 2.5 years ago. I do recall making a few late payments (possibly 2) and did receive a late payment fee of £12.00. The missed payments were simply due to forgeting to make the payment before the end of the month, as i did not have a direct debit leaving my account and made payment over the telephone. I did call Santander yesterday and they had a look into my account and could not see any record of late payments. Furthermore, all payments look ok on my credit file.

The area of concern that I have....On receiving a copy of my credit report yesterday evening, I have been given a credit score of 631 and a 5/5 star rating. As i understand (much to my panic) a credit score of 631 is low but if that is the case, I am unsure how i have managed to score 5/5 on the star rating. The explanation blurb provided by Call Credit also did seem to imply that I have a good credit basis...I am now very confused??

Since settling the consolidation loan, apart from the above balance with Topshop (that probably amouted to approx £150), i have not had any sort of credit since. At present, I simply have direct debits leaving my account for contact lenses and a mobile telephone contract and this has been the case for the last three years.

I am now very scared that once we do the full motgage application with Halifax (tomorrow), we will be declined for a mortgage on my credit score basis....! There is also the added problem that I am on a two year fixed term contract with work (5 months into the contract), which I have been assured by Halifax should be ok, as my partner has a permanent job and have been doing the same job for 2 years, but with a different organisation (where i was on a permanent contract). I am just now however concerned that this may be viewed a little less favourably because I somehow have a credit score of 631.

Any advice would be appreciated on how to interpret my credit report and the bearing this may have on the mortgage application .

Wh05apk

Do call credit do mortgages now? no, so how they score you is largely irrelevant, you are probably getting a "low" score simply because you do not have much credit, and so cannot prove that you are a good risk.

You have an AIP from HAlifax so you should not have any problem - Why are you going to Halifax? they are nowhere near the cheapest deal available.

puntoadzs

My gf and I have recently had a similar problem (similar value house to yours also) - my GF credit score was low around 700 mark and for this reason our mortgage in principle was refused . It turned out that she was not registered on the Electoral Roll (Completely different story i know) this bettered her score, however late payments from 18 months ago on a next card still appeared to be dragging her score down.

A couple of missed payments (no matter how small) will damage your score and probably will do for the next 2 years. However since my gf found out about her poor credit rating - she started to use her credit card on a regular basis and made sure payments were made every month without fail. 2/3 months later her score was well above average.

As mentioned in the reply above - regular use of a credit card and making payment regulary will show that you can manage any credit you have well and prove to the lender the risk of them lending to you is low.

I would also say that going for the lowest rate mortgage in your position may not be the best move - lenders like HSBC offering very good fixed rates for FTB at the moment are extremely picky when selecting who they lend to...the last thing you want is to keep getting turned down by lenders if you dont meet there lending criteria as this will effect your credit report and decrease your chances of getting a mortgage anywhere! - I am sure you already have but seek mortgage advice it is priceless!!!

Wh05apk

puntoadzs wrote: »

I would also say that going for the lowest rate mortgage in your position may not be the best move - lenders like HSBC offering very good fixed rates for FTB at the moment are extremely picky when selecting who they lend to...the last thing you want is to keep getting turned down by lenders if you dont meet there lending criteria as this will effect your credit report and decrease your chances of getting a mortgage anywhere! - I am sure you already have but seek mortgage advice it is priceless!!!

For that reason, I certainly would not recommend applying direct, unless you know you are 100% perfect credit wise, HSBC are extremely picky, and very few enquiries with them get agreed, a good broker will direct your application where they feel you stand the best chance.