BTL mortgage - credit score issue

PocketGuy

Hi
Apols if this is the wrong place for this. Could well be my non-techie incompetence, but couldn't do a 'credit score' search as a phrase and find a thread/section dealing specifically with this question...


I'm trying to get advice or a steer on a 'rule-of-thumb' relationship between credit score and level of unsecured debt. I'm about to go for a BTL mortgage, and was knocked back last year when applying for a second property, but had just re-organised my finances (BT cards, etc), so credit suddenly started piling up on my report. This has now eased a bit.
Specifically:

• 2 x CCs - limit of £19k, used £14k - all 0%
• 1 x Loan - £15k, now £11k - 8.9%
• 1 x OD - £3,900 fee-/interest-free (Santander Premier A/C). Periodically used: balance currently well in credit
• 1 x Resi mortgage @ 90% LTV (heckuva deal when I got it... )
• 1 x BTL mortgage @ 75% LTV (low value monthly)
• Returned from abroad Dec 2007. Same house (and electoral roll) since.
• 6 credit accounts: Mob, etc. Perfect payment record.
• Income just dropped to £46k pa.
• Demonstrably living within my means...

Callcredit has my credit score at 586, which I understand to be subprime(!) Clearly, there's an exposure issue, and the low/no interest+money in the bank+money working elsewhere+current property rental yield seem to have no bearing.


Anyone happy to offer wisdom on ratios / percentages of CC/Loan credit limit:O/S debt or other ideas that might help improve the situation? Note: if advice comes from anyone in the financial services sector, it will be taken purely as a steer and not as 'professional advice' - no worries there

Again, apols if this type of Q is posted elsewhere.
Cheers

samtoby

Credit scores mean nothing apprently. Its to do with your wages and affordability. You have a lot of credit;but you need one of the mortgage advisors to say what to do really.

Dave_Ham

Hi there,

Is your income PAYE and not inclusive of the buy to let income.

Forget what numbers the various credit agencies give you, selecting the right lender will provide a result.

Is your unsecured debt increasing, decreasing or stabilising that will provide clarity on placement.

Additionally, if your current account is currently in credit a show of force a month before an application and paying some off the unsecured cards will help.

What deposit do you have?

kingstreet

I'm surprised your personal credit is an issue, other than in terms of trend - increasing or decreasing.

What do you actually need? Are we talking 85% LTV here? What's the rental income like? Does it fit the typical IO 6% and 125% thresholds?

Who did you apply to last time? Were you given a definitive answer for the decline, or have you simply read between the lines?

Thrugelmir

PocketGuy wrote: »

[*]Demonstrably living within my means...

Cheers

You may be surprised to learn that lenders may think otherwise.

Conrad

All these types of question can NEVER be satisfactorily answered, because lenders affordability and scoring sotware has trillions of permutations.

All you can do is apply and see, period.

I've lost count the times people come to me claiming they have a 999 score, that Banks are throwing money at them (credit card offers etc), so they will deffo be good to go, and hey presto lenders they fail them on credit score.

Honestly don't waste your time trying to second guess, if you get declined, so be it, try again in 6 months, no biggie.

PocketGuy

Hi Folks
Thanks for the responses.
In answer to Q's posed:
- PAYE (gross)
- only consider high yield prop. This one's 74.9% LTV & c. 9.5% gross yield. Nett rental likely to be 2.5x mortgage payment
- debt is decreasing monthly
- read between the lines on the decline, but 10 months have passed...

If I reduce the CC balances before application, how much counts as a 'show of strength'? I don't particularly want to pay off too much 'free' money unnecessarily early, so minimising this would be useful.

Again, thanks for the feedback & comments.

Dave_Ham

All makes sense and PAYE would open up to using more lenders hence why I asked.

Who is the existing buy to let with as surely they would be comfortable with you as an experienced landlord?

Additionally, if unsecured debt is declining in value and you have more available to you then you may not even need to pay more in to boost score before the last hurdle.

Well, that coupled with us now knowing you are at under 75% LTV - which again makes a signicant difference.

As someone said, it is hard to second guess a lender credit score. Whilst I don't agree that it is just a case of giving it an application and see how it goes, I am surprised a broker could not get this through with a bit of lender contact...

Hope this helps...

Thrugelmir

PocketGuy wrote: »

If I reduce the CC balances before application, how much counts as a 'show of strength'? I don't particularly want to pay off too much 'free' money unnecessarily early, so minimising this would be useful.

Cash and debt do not sit in two different pockets. The two are added together to arrive at a net position.

From a lenders perspective you funding the deposit with debt not cash. This is the house of cards syndrome. When one falls there's no foundation to your empire. In essence making you a poor lending risk statistically. With limited funds available there's no need for lenders to take risk.