Credit Checks... I may fail because I have NEVER HAD ANY DEBT!

Matthague

Hi,
May be in the wrong thread but searched for Credit Checks and this was the one that looked the most applicable...(I have put it in the House buying one as well as that was what we were doing at the time but it's not exclusive to that)

Went to see about buying a house and was told by the lady there that they'd have to run a credit check to make sure I had a good credit rating. (despite the fact i'd saved a substantial deposit!).

She asked if we had any debts, or had borrowed before/had credit cards etc..

When I told her that we didnt, managed our money and didnt need to do any of the above she looked worried and said it may be a problem..

Apparently as we've never failed to pay or had to borrow we can't be rated against anything and it may hinder us in the future!

I can see what she meant but surely the people who don't have to borrow/have Credit cards should be rewarded for this, not punished

InsideInsurance

It is the fear of the unknown, the problem as you say is that you've never proven that you are a good payer and act responsibly by having a mainstream credit product and keeping up with the payments.

Just because your records are blank doesnt automatically mean you're responsible, you could be having a lot of payday or door step loans that are often not reported to credit reference agencies.

Are you sure you dont have ANY credit? You dont have any mobile phone contracts rather than PAYG? No gas/ electric paid by monthly DD rather than PAYG (though only a few report)?

grumbler

Matthague wrote: »

I can see what she meant but surely the people who don't have to borrow/have Credit cards should be rewarded for this, not punished

You are probably right, but it's not how the system works. Someone who had never had any credit/debt can demonstrate incapability of managing the debt after getting the first credit.
See Martin's article: Credit Ratings

Have you ever had a mobile contract? A current account with an overdraft (even if you have not used the overdraft)? Both might have contributed to your credit history.

Matthague

I did get a mortgage offer so all's well on that front.

I have nothing at all - Don't believe in owing/borrowing money to pay for something I can't afford.
Phone is PAYG, all bills are paid almost immediately no DD's

I can see the point but the honest people that aren't in debt are the ones that may suffer (I think the deposit we were going to put down was a factor in the acceptance)

KingElvis

You have a "thin file" so the lenders have nothing to base a decision on.

Go for a card like the Crap One Classic or Barclyacrd Initial.

R_P_W

You dont have any direct debits at all?

shortcrust

Some people have rather funny ideas about credit and debt. Is it really virtuous not to have credit cards? Is it really something that should be rewarded? I don't get it. I'm also struggling to reconcile a seemingly moral objection to debt with borrowing a ton of money to buy a house that can't be bought outright.

Building a good credit history before applying for a mortgage is no different in my eyes to getting relevant experience before applying for a uni course, or getting appropriate qualifications before applying for a job.

I have cards that I use and pay off in full each month. I never pay a penny in interest, I have more protection than I would if paying by cash, and I get cashback on all my purchases. I think I should be rewarded!:D

grumbler

shortcrust wrote: »

Some people have rather funny ideas about credit and debt.

Any people in this thread?

I'm also struggling to reconcile a seemingly moral objection to debt with borrowing a ton of money to buy a house that can't be bought outright.

Why moral? Can it not be a purely financial decision, i.e. mortgage costing less than renting?

Building a good credit history before applying for a mortgage is no different in my eyes to getting relevant experience before applying for a uni course, or getting appropriate qualifications before applying for a job.

No, simply because mortgage is the biggest credit that most of us ever have. It's like applying for a uni course without finishing the school or applying for PhD without finishing a uni course.

I think I should be rewarded!

Are you not?

shortcrust

grumbler wrote: »

Any people in this thread?

Yes, the OP clearly feels there is something morally dubious about credit/debt as illustrated, for example, by an apparent expectation of reward for implied 'good' behaviour.

grumbler wrote: »

Why moral? Can it not be a purely financial decision, i.e. mortgage costing less than renting?

Clearly getting a mortgage can be a purely financial decision, as can getting a credit card, but viewing one type of borrowing from a moral perspective and the other from a financial one makes no sense to me.

grumbler wrote: »

No, simply because mortgage is the biggest credit that most of us ever have. It's like applying for a uni course without finishing the school or applying for PhD without finishing a uni course.

Sorry, I really don't understand your meaning here.

grumbler wrote: »

Are you not?

Yes I am rewarded. I thought the tongue in cheek nature of the final sentence in my post was pretty clear.

Matthague

Now now.. I don't want any arguing!! I was only complaining about the fact you need to have had credit to get a mortgage (which then I proved wrong by being offered one due to the size of deposit)

As I see it, a mortgage usually incurs interest, therefore you pay back more than you take. I am in debtted to them and therefore owe them the money (I don't want to do this... but for arguments sake have been to see if we could get one)

A credit card is different as you can pay it back without any interest/additional payments. I see the benefits of using it to get cash back etc as mentioned and I do know it is safer for online purchases.

If I could get a mortgage where like a Credit Card I paid the limit off a month and wiped it clean I would but thats not an option. If I got a mortgage and paid it off faster than planned it would still cost more than the initial outlay.

I just don't see why should I fill someone else's pockets for a mortgage? Perhaps I'm old fashioned, I do feel that in the age of 1 in 3 people apparently being in debt perhaps it may encourage people to live within their means (be it with or without a credit card), save up and not be forced into lending. Imaging owning your own house and not having to worry that you'll be £x short for years to come...

Doesn't mean it'll happen though...You'd need to be very trusting :P

I've edited to put this bit in from the other page thats discussing this issue:

How about this for an idea for no risk for the provider... ? they'd pay the shortfall after my deposit and i'd pay them back. if I failed they'd own the house which as i would have paid the majority on would mean they'd be getting the better end of the deal... (and i'd end up with nothing so really it's my risk?)