Credit score and mortgage

Hutch100uk

I have a credit score of 849 on Experian which is 'fair'. I have enquired with a financial advisor about 95% mortgages but she has advised me that I would need an excellent credit rating for one of those.

Does anyone have any idea if I would have much chance of a mortgage with a 10% deposit with this score. I'm working to get it up to a 'good' rating (not far off now).

The only issues with my credit report are that I'm using too much of my available credit (so am trying to pay off more of my credit cards) and that I made 2 late payments to an old British Gas account 3 years ago (by 3 months) and apparently that would be flagged up when applying for a mortgage.

I also have a lot of linked addresses due to renting and being forced to move a few times over the last 10 years (can't do anything about that).

HappyMJ

An excellent credit rating really just means no adverse credit history. No defaults, no arrears and certainly no recent and unpaid CCJ's.

The late payments on your BG account should be ignored by most lenders by now.

I would question why do you have any outstanding debt? If you've got savings then you should use your savings to pay off your debts.

Any debts you have outstanding will reduce the amount you can borrow by the same amount so you may as well pay them off and save money so you can borrow more at a cheaper rate of interest. The only reason to keep some outstanding credit card debt is if it is on a 0% interest rate deal which would be cheaper than a mortgage.

After you've purchased the house and moved in you can use the credit cards again if you "need" to.

Hutch100uk

HappyMJ wrote: »

An excellent credit rating really just means no adverse credit history. No defaults, no arrears and certainly no recent and unpaid CCJ's.

The late payments on your BG account should be ignored by most lenders by now.

I would question why do you have any outstanding debt? If you've got savings then you should use your savings to pay off your debts.

Any debts you have outstanding will reduce the amount you can borrow by the same amount so you may as well pay them off and save money so you can borrow more at a cheaper rate of interest. The only reason to keep some outstanding credit card debt is if it is on a 0% interest rate deal which would be cheaper than a mortgage.

After you've purchased the house and moved in you can use the credit cards again if you "need" to.

I don't have much in savings!! My parents are giving me the deposit money.

Hutch100uk

My outstanding credit card balances are only around £2,500 but my savings are around £1500. I know its sensible to use savings to pay off debt but, with 2 children, I need an emergency fund (especially with a car in case of problems with it).

MABLE

Hutch100uk wrote: »

My outstanding credit card balances are only around £2,500 but my savings are around £1500. I know its sensible to use savings to pay off debt but, with 2 children, I need an emergency fund (especially with a car in case of problems with it).

Not aways. Depends on the interest rates.

user1168934

To give you an idea a couple of years ago I was trying to get a 10% mortgage. I had the savings just enough to cover for the deposit & expenses, decent income, excellent credit history and no debt and I was refused mortgage.

Things may have changed now but I think you need to sort out the credit card debt to have a resonable chance of getting a mortgage. Those previous late payments might cause some issues. Too many addresses wont be an issue I think. To be honest I am struggling to understand how you are planning to buy and maintain a property with such low savings and relatively high debt and two kids even with your parent's help for deposit - do they ever expect you to pay them back? Of course I don't know all about you so you might have it all worked out. Have you checked if you are meeting the affordability criteria? Can you not borrow some money from parents or someone (interest free) to clear up the debt?

Hutch100uk

user1168934 wrote: »

To give you an idea a couple of years ago I was trying to get a 10% mortgage. I had the savings just enough to cover for the deposit & expenses, decent income, excellent credit history and no debt and I was refused mortgage.

Things may have changed now but I think you need to sort out the credit card debt to have a resonable chance of getting a mortgage. Those previous late payments might cause some issues. Too many addresses wont be an issue I think. To be honest I am struggling to understand how you are planning to buy and maintain a property with such low savings and relatively high debt and two kids even with your parent's help for deposit - do they ever expect you to pay them back? Of course I don't know all about you so you might have it all worked out. Have you checked if you are meeting the affordability criteria? Can you not borrow some money from parents or someone (interest free) to clear up the debt?

Well I'm not sure that £2,500 is particularly high debt!!! We pay more in rent than we would in a mortgage so buying can only be an improvement in our finances. We would potentially be able to save a bit more each month if our outgoings are less. We do live a biggish house (which was our choice) but we have proved we can more than afford the repayments.

Hutch100uk

user1168934 wrote: »

To give you an idea a couple of years ago I was trying to get a 10% mortgage. I had the savings just enough to cover for the deposit & expenses, decent income, excellent credit history and no debt and I was refused mortgage.

Things may have changed now but I think you need to sort out the credit card debt to have a resonable chance of getting a mortgage. Those previous late payments might cause some issues. Too many addresses wont be an issue I think. To be honest I am struggling to understand how you are planning to buy and maintain a property with such low savings and relatively high debt and two kids even with your parent's help for deposit - do they ever expect you to pay them back? Of course I don't know all about you so you might have it all worked out. Have you checked if you are meeting the affordability criteria? Can you not borrow some money from parents or someone (interest free) to clear up the debt?

So did you ever get the mortgage then? And if so, what did you have to change?

AliceBanned

Hutch100uk wrote: »

I don't have much in savings!! My parents are giving me the deposit money.

This has an impact as well - presume you know that you need to let lenders know that the deposit money is coming from parents rather than your savings (this has an impact on how happy they are to offer you a mortgage as they need to get a picture of your spending and saving habits over time).


I got a mortgage but had to have 15% deposit, though I had about £2k credit card debt at the time but I had had a lodger for a year and saved as much as I could, especially for the 3 years before applying. I knew it was the only way as I had been refused in the past.

Hutch100uk

I should also say to everyone - this is a joint mortgage. My partner has an excellent credit rating and reasonable salary!

AliceBanned

Hutch100uk wrote: »

Well I'm not sure that £2,500 is particularly high debt!!! We pay more in rent than we would in a mortgage so buying can only be an improvement in our finances. We would potentially be able to save a bit more each month if our outgoings are less. We do live a biggish house (which was our choice) but we have proved we can more than afford the repayments.

You might need to find ways to increase your disposable income by cutting back a bit more - the lenders will also be looking at your spending habits (yes including where you choose to live in relation to your earnings). It is hard that you can pay more in rent than you would be spending on a mortgage, it does seem unfair but from the lenders' point of view it is the risk they would associate with you as the borrower that matters, and they try to minimise this obviously. How much you can pay in rent won't necessarily make them happy to lend - especially if you could cut your costs and save by renting somewhere cheaper? I hope that makes sense.