Credit Reports - New Mortgage

leicsmarkyr

My fixed rate is due to expire later this year so looking to get my report sorted in preparation.

I have a few credit cards and bank accounts with an overdraft on them but all with a nil balance. Is it worth getting most of these closed so they are 'settled' and to remove the overdraft on the bank account (I use this account to get free insurance and such like but never has a balance on it so the overdraft limit is of little use).

My thoughts would be just to keep the accounts that I really use open on there which is 2 bank accounts, 3 credit cards and mobile phone.

kingstreet

If you are planning to ask your current lender for a retention product, you don't need to do any of that.

If you plan to remortgage to a new lender, the most important issues will be loan to value and income/affordability.

Having unused credit is a lot less relevant for a remortgage than it is for a purchase.

leicsmarkyr

Thanks. Not sure which will way will be going: whether new provider or existing. Based on current rates probably existing provider.

So guess makes no major difference if I close the accounts down or not as will be based on the balance of the accounts (that are owed).

kingstreet wrote: »

If you are planning to ask your current lender for a retention product, you don't need to do any of that.

If you plan to remortgage to a new lender, the most important issues will be loan to value and income/affordability.

Having unused credit is a lot less relevant for a remortgage than it is for a purchase.

kingstreet

Yep. The only lender I've known have any concern about unused credit is Yorkshire Building Society, and I'm pretty sure that was for 90% purchase cases only.

As you say, lenders are normally only interested in what's outstanding and how that impacts affordability.

JimmyTheWig

I agree with kingstreet.

Outstanding balances on cards / loans / overdrafts will be seen as issues with getting a new mortgage. [Even if they are at 0% and you have the money in savings to pay them off.]

But unused credit will have little, if any, impact. Might even have a positive impact. The fact that lots of other companies trust you to give you credit suggests that you are a credit-worthy person. Someone with little available credit (particularly someone using a high proportion of their available credit, so may not be relevant to you) might be seen as more of a risk.

leicsmarkyr

So would you then recommend keeping the credit accounts open?

Looking at my report I have 4 credit cards I can close and 1 overdraft to remove
My partner has 1 credit card to close

(Baed on what is not currently used)