Credit Cards and Mortgage Credit Rating

Willem-de-Blois

Hello. I have two credit cards and I am thinking about getting rid of the more expensive one to try and improve my credit rating before I send it to my mortgage advisor.


















I just want to check that my plan is sound.


Card A is the more expensive one at 22% APR which has a credit limit of £4500. It presently has £300 debt on it. I plan to cancel this card next month when the balance is clear.


Card B is 16% APR and has £700 on it. I plan to keep this unless it is better that I close this too and get a new credit card at a lower rate that I can use to improve my rating.


Do my options seem sound?

[Deleted User]

Is your income very low? If not, I would keep both.

Candyapple

Whatever you decide, whether to close the card(s) and/or open a new one, don’t forget that it can sometimes take up to 3 months to reflect these changes in your credit reports. Also you would need to obtain copies of all 3 of your credit files from the agencies and make sure the data is correct in each of them. It’s probably unwise to take on any new credit if you are going to be applying for a mortgage soon as it will affect your affordability criteria.

Willem-de-Blois

My pay is not very low. I am at the upper end of the 20% tax threshold.


The brief history behind both cards is that Card A is the one I had in university which I maxed-out by the end of my final year. I took a low paying graduate job as I needed to gain experience in order to get a better job. This plan worked but it meant I 0% balanced transferred the credit from Card A to Card B and I moderately re-used Card A to help me get by with such a low salary.


By the time I got into a decent paying job, both cards had a combined debt of about £5k which I have brought down by paying around £400 per month to the figures I quoted in the OP.


It sounds as if I should wait to ask for a mortgage until three months after I have cleared both cards at least.

Paully232000

I would say with that level of debt and your salary of somewhere in the high 30Ks it is not going to affect any mortgage that you are, or are not going to get, especially if you are going to pay them off fairly soonish.

I am sure i read that mortgage companies take 5% of the balance as a payment which would be £35/month as you are going to pay one of them off next month.

When I applied for a mortgage the mortgage company stated that I needed to pay off the CC prior to completion of the mortgage, which you, I am sure, could also say. I had to prove i had with a copy of my CC statement showing the payment.

My CC debt at the time was £7000 at 0% which i paid off prior to completion with some of my savings.