Mortgage advice-credit rating

drspec

Hi,

I'm looking to get a mortgage for a flat, I had posted before about other info but the basics are

• Full time research student for the last 3 years 9 months-salary from the university for the first 3, unpaid for the last 9. Lived off savings.
• Begin a job in June-starting salary ~£29k
• Flat is 90k, I have a 10k deposit and can have a guarantor if required.
• Very little financial commitments (max £150/month).

I just checked my credit score on Equifax is 350-not great but not awful. Would this hinder my chances of getting a mortgage?

Also, for anyone who knows about these reports, on the different sections of the report everything is green except 'Credit agreements' which is red. However, when I go into each part individually there are mostly green boxes at each month and a few of oranges across 6 years. Why would the overall colour be red if separately none of them are?

stephenni1971

0 to 278 is very poor and represents very significant risk to lenders
279 to 366 is poor and represents significant risk to lenders
367 to 419 is fair and represents some risk to lenders
420 to 466 is good and lenders will be more inclined to grant credit
467 and above is excellent and lenders will be more inclined to grant credit

From Equifax website...

You have small deposit, no income and a poor credit rating.

I think you might want to consider starting the job, get some money in, pay off your debts and start looking once you can demonstrate managing your credit consistently and have a regular income.

Caladan

Evaluate why Equifax considers you a poor bet as well - If you're happy too, post what debts you have, what your credit limits are and what your payment history is like.

drspec

I hadn't seen that scale-only saw the orange colour and thought it wasn't good but not poor.

How long do you think I would need to be working before applying? Do you think a guarantor mortgage would be an option?

I completely agree it would be better to wait till I've been working a while, pay off debts etc and had actually planned on waiting till next year to buy. However, I have seen a flat that I really love-it was initially advertised to rent but the owner now wants to sell and its a great opportunity.

My debts are as follows:

• Credit card 1- Limit=£1600, Balance=£987
• Credit card 2- Limit=£1000, Balance=£612
• Store card 1- Limit=£250, Balance=£81
• Store card 2- Limit=150, Balance=£68
• Orange phone contract=£24.99/month

I have put the phone bill up as a debt as it is taken into account in the 'credit agreement' section of the report. In that section I also have 2 store cards at £0 balance (I know I should close these, I thought they were), two previous phone contracts which are settled.

No defaults since June 2012. 11 defaults from 2009-2012. Although 5were the same month as I switched bank accounts and they bank didn't transfer over my direct debits. I was told at the time this wouldn't affect my credit rating as it was their fault but this has obviously not been the case. The bank paid me the sum to cover the charges but perhaps because I didn't make the creditors aware of the issue it was reported as a default?

drspec

I also have an overdraft of £1000 which I generally use. Haven't for the past 9 months though as I have not had a salary I have the balance at 0 and transfer enough money to cover direct debits each month. So it does appear that I have 0 money in my account too...which I'm not sure is a good thing?

stephenni1971

It's all academic until yu have at least 3 and ideally six months pay statements to show.

Use that time to pay down your balances make sure you're on electoral roll etc

Now is not the time...

Caladan

May not have a big impact but...pay off the cards, or at least reduce how many you have.

I'm too tired/tipsy to write a full response but if the missed payments (not necessarily a default as such) were a bank error than at the least get a letter from the bank confirming this and submit what's known as a 'Notice of Correction' to the Credit Reference Agencies. This allows you to explain what happened.

Some lenders may even remove the missed payment if they accept the banks letter, although I'm not sure what the rules are around this as technically the payments WERE missed even if not your fault and credit records need to be true and accurate.

ethank

Research Student income is generally not classed as income by lenders. You need to think about proceeding when you are in employment and have passed any probationary period you might have.