Could opening a new current account affect a mortgage application in the near future?

mickael28

My wife and I were thinking about opening a new current account each due to a much higher interest offered by them. We would keep the previous current accounts opened but we'd move most of the money for the new account.

We were as well thinking about applying for a mortgage soon (maybe trying to get pre-approved in one or two weeks). The application process informs you that:

When you apply, we will ask your permission to approach a credit reference agency to see if it has any information about you. Our decision will be based on the details you provide, together with
information we receive about you from the credit reference agency

I read in the past that it's not a good idea to apply for Credit Cards when you're about to ask for a mortgage because they credit checks would appear in your report and your credit score would be lowered. Do you know if this is still the case when we're talking about applying for a new current account which will perform a credit check on application?

Many thanks!

kingstreet

No new credit between application and completion!

That's current accounts, cards, loans, nothing.

mickael28

kingstreet wrote: »

No new credit between application and completion!

That's current accounts, cards, loans, nothing.

Thanks kingstreet. I didn't know a current account counted as credit.

And if we sort this out before we apply, do you think this could be seen as negative (as it's new credit acquire just a few weeks before the application) or would that be ok as it's not between application and completion?

kingstreet

It's a search and it will be visible.

It may have no impact at all, or it may tip your application from a pass to a fail. I really can't say what might happen.

A current account can be lodged on your credit file as a credit agreement and have an overdraft, so it's just like a loan or a card.

If you can avoid doing it, avoid it. If you have to do it, do it before the mortgage application.

mickael28

kingstreet wrote: »

It's a search and it will be visible.

It may have no impact at all, or it may tip your application from a pass to a fail. I really can't say what might happen.

A current account can be lodged on your credit file as a credit agreement and have an overdraft, so it's just like a loan or a card.

If you can avoid doing it, avoid it. If you have to do it, do it before the mortgage application.

I see what you mean now, thanks again!!

[Deleted User]

kingstreet wrote: »

It's a search and it will be visible.

It may have no impact at all, or it may tip your application from a pass to a fail. I really can't say what might happen.

A current account can be lodged on your credit file as a credit agreement and have an overdraft, so it's just like a loan or a card.

If you can avoid doing it, avoid it. If you have to do it, do it before the mortgage application.

This is interesting, kingstreet. During my mortgage application last week with a high-street lender I also opened a current account with them. (I've been dissatisfied with my present bank for a while).

I will contact the mortgage advisor tomorrow to ask whether this could impact on my application, which is pre-valuation.

The question then would be whether it would be prudent to cancel the current account right away, hopefully before credit checks have been carried out, or whether that could just complicate matters?

kingstreet

If it was the same institution, was the same credit search used?

I would guess their systems can cope with something like this. I'm suggesting avoiding it with two different institutions

[Deleted User]

Thanks kingstreet - I'll clarify tomorrow just to make sure it isn't going to cause any untoward problems. It's a good issue to flag up...

Saronn

Oh dear I tried to apply for a bank account with First Direct only to be refused on credit scoring (I have no missed payments or any defaults - but I do have a cc with around £5k). I am due to apply for a mortgage next week - will this affect my mortgage application?

GMS

Saronn wrote: »

Oh dear I tried to apply for a bank account with First Direct only to be refused on credit scoring (I have no missed payments or any defaults - but I do have a cc with around £5k). I am due to apply for a mortgage next week - will this affect my mortgage application?

Firstly get copies of your credit reports from Experian, Equifax and Call Credit. £2 statutory ones are fine.

Where are you applying for a mortgage? What loan/purchase price?

Saronn

I've had a look at my credit reports - they are fine. I spoke to my mortgage advisor & she said First Direct are very picky & it shouldn't affect my mortgage application.
I am hoping to buy with the Help to Buy Scheme which will be available from 1st April. I am a first time buyer & hoping to buy with my sister-in-law who has to move due to marital break down - she would be classified as a home mover I've been told. We have had a 90% mortgage approved in principle a couple if months ago. However we can no longer afford 10% deposit thus will be applying with Help to Buy.
We are hoping to apply with Nationwide for a house worth £144k