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Do youngsters need credit history to get a mortgage - advice appreciated
tm9
Posts: 37 Forumite
Hi, my daughter will be wanting to apply for a mortgage in a couple of years time and has asked whether she should get a credit card now to build up some credit history. She has had a bank account since the age of 14, she has never borrowed any money and she is in full time employment - so we guess she has no credit history.
Do you think using a credit card now for small purchases like petrol, etc. and paying this off every month is really necessary or do the banks/building societies accept that people applying for their first mortgage are unlikely to have much history.
Really appreciate any advice and views on this.
Do you think using a credit card now for small purchases like petrol, etc. and paying this off every month is really necessary or do the banks/building societies accept that people applying for their first mortgage are unlikely to have much history.
Really appreciate any advice and views on this.
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Comments
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It's a very good idea and one I suggest to anyone thinking about a mortgage.
If you use a lender which credit scores, positive points from well-conducted existing credit is vital to balancing the negatives of a high loan to value etc.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
To be honest, no credit history can cause a decline or refer at application stage - however i imagine on appeal most lenders would be prepared to overturn it if you can show a good bank account.
That being said, a credit card with a small limit on to use for petrol and a bit of shopping wouldnt do any harm so long as she keeps on top of it.I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
She is in a position of strength. I'd pick a credit card either with her bank or with advantages such as 0% on purchases or cashback/loyalty points which mean she'll also make small gains to spend on presents for caring parents or put towards a house deposit.
The key is to make sure it's always paid off to the point where no interest is incurred. Easy to do, but also easy to forget a payment if you're not used to having the responsibility.0 -
The only credit i had before applying for my mortgage was an overdraft i never used and a phone contract if that counts.
I had no issues at all.
My mortgage is with who i bank with so i'm not sure if that makes any difference as they could see how i ran accounts anyway.Mortgage 1: May 2012 £90,000 April 2020: £47,000
Mortgage 2: £270,000😱 Jan 2019 £253,000 April 20200
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