Credit Card advice for mortgage application

brydo86

Hi there

Just a quick question as I am hoping to apply for a mortgage at the tail end of this year. I have 5k on a credit card, having paid off another at 2.5k. Would it be advisable to pay off this card via a credit union loan as I am currently paying 20% apr and do not wish to balance transfer as I believe it will upset my improving credit score. The loan would not be an issue as it is through my work. My thoughts are if I pay this off then I am "credit score" debt free. The only debt would be the credit union loan hopefully boosting my chances of getting a mortgage.

Many thanks

Brydo

[Deleted User]

A BT wouldn't damage your credit history.

brydo86

Deleted_User wrote: »

A BT wouldn't damage your credit history.

It doesn't? Surely a credit card company has to look at your current credit status?

[Deleted User]

Yes. But all you've done is move a debt from one place to another.

Tixy

A potential mortgage lender will assess your financial status as a whole. Unlikely to make much difference to them whether you owe the remainder of the £5k on a credit card or a credit union loan.

brydo86

I was worried incase I got refused by a credit card company when transferring a balance and therefore affecting my credit score. I realise they take it all credit into consideration but when doing a credit check it would show thati have paid off all my balances giving me the best score possible?

Thanks for the replies by the way.

Tixy

No potential lender (mortgage or otherwise) ever see the credit score that the credit reference agencies will sell to you.

If you are declined then all that will show on your credit file is that a credit application search was made. A single search 6months ish before a mortgage application is going to make no difference to a mortgage lender's decision.

brydo86

Tixy wrote: »

No potential lender (mortgage or otherwise) ever see the credit score that the credit reference agencies will sell to you.

If you are declined then all that will show on your credit file is that a credit application search was made. A single search 6months ish before a mortgage application is going to make no difference to a mortgage lender's decision.

Are you saying a credit reference agency is pointless then? I'm currently using credit expert.

So I'm best trying to apply for one balance transfer card and then stopping if refused?

Kittycat1981

The made up score CRA give you is useless. Each CRA has their own internal score and most require you to stump up the cash to see this made up score.

What the lenders go on is their own (secret) scoring criteria and your CRA report (your history of using credit, payment history etc etc) and if that matches their criteria then credit approved.

If you could BT to a 0% card you will be paying more off the debt (20% in your case). Throw as much disposable income as possible at your debt in the fore coming months pre- mortgage application.

Also stop paying a month subscription to view your report. Noodle is free. Before applying for your mortgage put in a £2 statutory request from each CRA for your report.

andydiysaver

Deleted_User wrote: »

Yes. But all you've done is move a debt from one place to another.

I think what OP is saying is does the credit union report to the CRA's or not which I'm not sure I know the answer on - it it doesn't, there may be advantage there in terms of affordability versus the mortgage loan - if it does, no change unless the percentages come down better


agreed on how all lenders score on data not file -I've been through this myself - but a popular way (not exclusive) that they (individual lenders) do this is look at percentages of debt versus credit limit - or orig value - it's as good a way as any to gauge how stressed/exposed to debt an account is already - I'd never say take out another credit card to make a percentage on one go down , I would say try and get it to about 30-40% or lower of total value, and if the CRA doesn't reference the credit union - the only bit that I'm unsure on as have never done credit union , then I do see advantage there, simply because the mix of numbers the mortgage provider gets to crunch in their own way, is understated by however much the union has, other people might know more on the union bit.

brydo86

andydiysaver wrote: »

I think what OP is saying is does the credit union report to the CRA's or not which I'm not sure I know the answer on - it it doesn't, there may be advantage there in terms of affordability versus the mortgage loan - if it does, no change unless the percentages come down better


agreed on how all lenders score on data not file -I've been through this myself - but a popular way (not exclusive) that they (individual lenders) do this is look at percentages of debt versus credit limit - or orig value - it's as good a way as any to gauge how stressed/exposed to debt an account is already - I'd never say take out another credit card to make a percentage on one go down , I would say try and get it to about 30-40% or lower of total value, and if the CRA doesn't reference the credit union - the only bit that I'm unsure on as have never done credit union , then I do see advantage there, simply because the mix of numbers the mortgage provider gets to crunch in their own way, is understated by however much the union has, other people might know more on the union bit.

Thanks for the reply. Maybe I wasn't clear on OP. I'm not sure how mortgage companies decide whether you are applicable to a mortgage or not. My understanding was that a credit check would be done by them for sure. So my thoughts were to pay off my credit card via credit union therefore having no more debt in relation to what credit reference agencies look for and thus giving me the best score possible to me. I understand that I need to reveal all my debts when applying but thought moving to credit union would boost my chances as my credit reference agency debt would be zero.