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Reducing overdraft to boost credit rating
thenewbee
Posts: 143 Forumite
I may be applying for a mortgage in the next month or so and have been advised to reduce my overdraft to appear better to prospect lenders. However this will constitute a fresh application for an overdraft and therefore I think might be counterintuitive... any ideas or experience as to what is the best way to go? It's currently an unused 2000 overdraft leftover from my student days bearing in mind I have 2000 credit card debt also.
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Comments
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How many times have you been in your overdraft in the last 6 months? You could cancel it altogether if you haven't used it for a number of months."Dream World" by The B Sharps....describes a lot of the posts in the Loans and Mortgage sections !!!0
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An overdraft facility will have very little impact on a mortgage application and the card debt will see £100 per month deducted from affordability in setting what you can borrow.
You've said nothing about loan to value, income or any other credit information, so I'm going to say on the scant info you've provided, the things you've mentioned will have the impact described.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 -
I do still use my overdraft (but only up to about £200) every now and again so I don't think cancelling altogether would be wise.
I'm only really asking if having this application for credit on my record will have more of an impact on any mortgage application than the overdraft as it is. I don't know how much of a bearing overdrafts have on mortgage applications. In terms of LTV and affordability I do have a DIP with the credit card debt considered in.0 -
I would avoid any new credit searches if you already have a decision in principle as it can only harm you.
Leave things alone!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
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