First time buyers

FirstTimeHoper

Hello

My girlfriend and I have saved a good deposit and are in a position to start thinking about mortgages later this year.

However, neither of us have credit cards but we know we need something to build up a credit rating - can anyone advise a good card we can each get? Is it best to just pay something small off each month such as a phone bill?

Any tips or advise welcome.

Thanks!

T

Tarragondragon

FirstTimeHoper wrote: »

Hello

My girlfriend and I have saved a good deposit and are in a position to start thinking about mortgages later this year.

However, neither of us have credit cards but we know we need something to build up a credit rating - can anyone advise a good card we can each get? Is it best to just pay something small off each month such as a phone bill?

Any tips or advise welcome.

Thanks!

T

My partner had to do this, he got a tesco credit card with 0% for 19months, the bonus is he gets clubcard points on spends - puts his petrol on it and pays off by direct debit.

Might be worth looking for something with another benefit that you might use? I.e. Cashback/points

macman

If you are already living independently and paying utility bills, mobile bills, etc, then you will already have a credit history. You don't specifically need to use a credit card to get credit or a credit history.
And make sure you are on the electoral roll.

audigex

I'd agree with Macman - I've not seen any real suggestion that you need to have credit to get credit. It seems to be a bit of an urban myth, or at least one that relates more to credit cards/loans than mortgages

For mortgages, far more important is that you have to clearly "exist" on the credit reference agencies. That may mean credit, but equally it can mean any credit-based bill (phone bills etc), bank accounts, being on the electoral roll etc.

For simple loans, having credit available may help, along with other credit cards/loans... because credit card companies want to see that you're both profitable and responsible. They love people who pay the minimum payment 100% reliably, never use all of their credit but are constantly paying interest. So yes, in these cases credit can help.

For a mortgage, though, they just need to be sure that you can afford to pay: the profit is built into the products, and you're paying it regardless. Unlike with a credit card, where you're only profitable if you use it.

So yeah, having a credit card you use occasionally and pay off responsibly won't necessarily harm your chances of getting a mortgage, but it really shouldn't be necessary. Mortgage companies are far more advanced in their affordability checks these days, and base your application off your income/expenditure rather than purely your credit file.

ambioni

If you are comfortable using a credit card and paying it off each month (and definitely NOT missing any payments) then there are a few good ones. Co-op offer one designed to rebuild poor credit (my partner got it after his IVA), but I would also recommend a cashback card like Santander123, which gives cashback on all fuel and supermarket purchases. In addition, as other commenters have mentioned, make sure you are on the electoral roll, have a landline phone, and have been in the same job for at least 6 months (a year is better) before applying for mortgage application. Check your credit score before you apply; Experian and Equifax are both good but Noddle lets you sign up for free with no future charges and is also good.

Gadge2011

Never had a credit card.

I've however had phone contracts, utuilitys and other stuff like RAC, TV services etc... Not a problem at all in the mortgage process.

Make sure however that all of your address information matches correctly and that you are on the electoral roll. I found a problem when looking at my credit records that the address for the flat had been written in very different ways.

kingstreet

If you have a case which is weak overall, some (more) positive credit data may help move it from a decline to a pass, or a low pass to a higher pass resulting in having to provide fewer supporting documents.

If you imagine a lender scorecard requires a particular score to pass, you score more points for being at your address for three years or longer. You score more points for being in your current job three years or more. You score more points for being with your current bank for a certain amount of time.

If you haven'y got maximum points on issues such as these, you may be just short of the points needed to pass. Having and using credit may make up that shortfall.

So in itself, having a credit card and using it each month may not be the be-all-and-end-all but it may be one of the little things you can do which help to lift the overall quality of your application, making it acceptable to a lender when it may not otherwise have been.