Victim of my own thriftiness!!

Miss_Merlot

Hi all,

Am hoping someone out there can help put my mind at rest...

My situation - I am 31 and currently undergoing the mortgage application process with my husband on our first home, stressful enough at the best of times!

All should go ok - we are a professional, reasonably high-earning couple, have a 20% deposit saved, are both MOD security cleared (due to our jobs) and on paper look a pretty good bet - but for one worry I have about my credit score.

Maybe I am naive, but all my life I have been massively averse to debt. I only spend what I have in my possession, and do not use credit / store cards etc or go into overdrafts etc.

I never for a second thought that this kind of financial responsibility would actually adversely affect my credit rating (which I never had any reason to think about until now), which I was amazed to find is classed as Poor, simply because I haven't got much of a history to go on as I pay everything by debit not credit card!!

The only debt I have is £2,000 from a laser eye operation I had in January, and even then I was so freaked out by owing so much that I have paid over half of the original £4,500 off early in just three months!! However, this debt actually seems to have had a negative affect as, according to Experian, "the account is too new" to judge my ability to regularly pay back.

All this would say to me that I am a great person to give a mortgage, as I take my finances seriously and pay what I owe, but it seems the opposite is true...

My question is, will the bank take into consideration the fact that my credit history is poor because due to lack of history, rather than being full of missed / defaulted payments, CCJs etc etc....??

And if they do reject the application on this basis, is there an option to appeal the decision...?

My husband, dad and mortgage broker say not to worry, but easier said than done at times like these...

Thanks in advance for any advice!

olly300

While the bank looks at one or more of the credit agencies to see if you have issues on your record, they do their own assessment of you for a product.

Miss_Merlot

Thanks olly - what sort of things do the mortgage lenders take into account when reviewing your credit score...?

olly300 wrote: »

While the bank looks at one or more of the credit agencies to see if you have issues on your record, they do their own assessment of you for a product.

kingstreet

Did you get a mortgage agreed in principle when you started looking? That would have been the time to address these issues, rather than the full application stage.

Miss_Merlot

No, we went through a mortgage broker (a friend of husband) and he went through a kind of "interview" about our circumstances and seemed to think we would be good candidates.

It's only today that I wondered what my credit rating was, and then got a nasty surprise!

Am a first time buyer so basically don't know what am doing here, or what to worry about or not.

kingstreet wrote: »

Did you get a mortgage agreed in principle when you started looking? That would have been the time to address these issues, rather than the full application stage.

ACG

whether or not your a good bet overall.

Forget the score the credit agency gives you - its worthless (literally! A Glass hammer has more uses!), they even say in the small print its just their score.

They look at how you run your accounts, so if your never going overdrawn have saved your deposit and have no adverse and are on the electoral roll then i would be very surprised if you were knocked back.

Miss_Merlot

So would I! But I can worry for a hobby, and banks will reject on any excuse...

ACG wrote: »

whether or not your a good bet overall.

Forget the score the credit agency gives you - its worthless (literally! A Glass hammer has more uses!), they even say in the small print its just their score.

They look at how you run your accounts, so if your never going overdrawn have saved your deposit and have no adverse and are on the electoral roll then i would be very surprised if you were knocked back.

kingstreet

At the point you first spoke to me, I would have gone through your financial history and gathered the information I needed. If you had no real history of credit use, I'd suggest getting an agreement in principle to see if the overall case score for both you and your partner was sufficient to pass with a credit-scoring lender.

If it wasn't, I'd consider an application to a non-scorer, perhaps a smaller local building society, if I didn't have enough time for you to obtain a credit card and to start a history.

Leaving it until now means you are fire-fighting. You will feel under pressure to to find something quickly as the vendor and their agent will be expecting you to make progress with an application and a valuation or survey soon after agreeing to purchase.

Perhaps I'm too involved in newbuild and having to get things done yesterday, but our builders appreciate that by the time the purchaser is making a reservation, we already have the mortgage agreed and the application/documentation submission already mapped-out.

somethingcorporate

Banks want to lend money they just want to lend it to people who have proved to be responsible with credit in the past.

Unfortunately you do fall into an odd category of being so prudent you completely lack a credit history. Still, I think a bank would rather see no history than a horrible one.

Miss_Merlot

That's a really useful reply - thanks!

So there are alternatives then - do you have any suggestions for non-credit scoring providers...? At the moment our application is with Nationwide.

I don't think our vendor is in a massive hurry (chain-free transaction), and think we have probably garnered enough goodwill with the estate agent to have them extend another couple of weeks if we need to re-apply elsewhere.

Is anyone able to advise on the right of appeal in such cases...?

kingstreet wrote: »

At the point you first spoke to me, I would have gone through your financial history and gathered the information I needed. If you had no real history of credit use, I'd suggest getting an agreement in principle to see if the overall case score for both you and your partner was sufficient to pass with a credit-scoring lender.

If it wasn't, I'd consider an application to a non-scorer, perhaps a smaller local building society, if I didn't have enough time for you to obtain a credit card and to start a history.

Leaving it until now means you are fire-fighting. You will feel under pressure to to find something quickly as the vendor and their agent will be expecting you to make progress with an application and a valuation or survey soon after agreeing to purchase.

Perhaps I'm too involved in newbuild and having to get things done yesterday, but our builders appreciate that by the time the purchaser is making a reservation, we already have the mortgage agreed and the application/documentation submission already mapped-out.

GMS

If you have an application with Nationwide then presumably you have a Decision in Principle?

Why are you asking about appeals? Have you been turned down?

Why not speak to your broker with your concerns. They know your circumstances and must have recommended the mortgage applied for.