PLEASE READ BEFORE POSTING

Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.

We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

Reducing overdraft to boost credit rating

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.

Comments

  • Foxy-Stoat_3
    Foxy-Stoat_3 Posts: 2,980 Forumite
    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 !!!
  • kingstreet
    kingstreet Posts: 38,980 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    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.
  • thenewbee
    thenewbee Posts: 143 Forumite
    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.
  • kingstreet
    kingstreet Posts: 38,980 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    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.
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 346.7K Banking & Borrowing
  • 251.4K Reduce Debt & Boost Income
  • 451.4K Spending & Discounts
  • 238.9K Work, Benefits & Business
  • 614.3K Mortgages, Homes & Bills
  • 174.8K Life & Family
  • 252.1K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.