Where am I going wrong?

Daisy84

I was recently turned down for a mortgage (I'm a first time buyer) and was told by the mortgage advisor have a look at my credit score. I signed up to Equifax and was shocked to see my score is rated as 'poor'. I earn £38,000 per annum. I have car finance with about £1,000 left and a credit card that had £1,200 outstanding on it. I have always paid my bills on time and have never had any late payments. I always over pay my credit card monthly. The minimum is around £20 but I have a DD set up for £200 a month so I always pay back more. Other than my car and credit card the only other loan I have is my student one.
I also checked my score on Noddle and it was also coming out badly there. I don't understand why. I'm on the electoral roll where I currently live and have been here for nearly 3 years. I have no CCJs on my file or anything like that. I have noticed that I have a number of 'soft searches' for my mobile phone and car insurance could this be effecting the score? I'm really disheartened and don't really know where I have gone wrong. I have shown my credit file to a mortgage broker who has also said he doesn't understand why the score is coming out so low. can anyone help? Thank you

MEM62

Your broker should know better and should be telling you that you score is irrelevant as it is a randomly made-up number. (Perhaps you could try a different broker)

It is the data on your report that is important. If there is nothing negative there perhaps there are other things that are having an impact. How far back does your credit history go? Do you have the deposit readily available? Are you passing the affordability check?

[Deleted User]

The small card balance that is not paid in full may be worrying them. It suggests very little spare cash.

What else do your files say? Eg financial associates, over limits, missed payments etc? Ignore the scores as they mean nothing.

Daisy84

Thank you for your replies. No I have never gone over my limits and the past year have been very careful not to go into my main account overdraft. I don't have any missed payments. My credit card has a limit of £2,500 so I'm well under it. I've had car finance for 4 years which comes to an end August 2017. I've had my credit card for around 16 months. Maybe my credit history isn't long enough? Before that I have always paid for things outright. Sometimes I do I have a low balance towards the end of the month as I always transfer left over money to my saving to put towards my deposit as I'm saving up for it alone, but I never go into my overdraft. Could this be where I am going wrong? Thank you again

AliceBanned

What deposit do you have for a house purchase?

Daisy84

I currently have £11,000 and £3,000 of that is in a help to buy ISA. I've been looking at properties around the £90,000-£100,000 mark.

DCFC79

The advisor has given you duff info, he should have said to look at your report, he can't see your credit score nor can anyone else except you.

He any everyone else will see your credit history.

takman

Daisy84 wrote: »

I currently have £11,000 and £3,000 of that is in a help to buy ISA. I've been looking at properties around the £90,000-£100,000 mark.

It's pretty silly to have £11000 in savings and then not pay your credit card balance in full each month!. Your just wasting money by paying interest on your credit card!.
Also as others have said by not paying it in full makes it look like your short of cash each month so can't afford any more debt.

MEM62

Daisy84 wrote: »

I currently have £11,000 and £3,000 of that is in a help to buy ISA. I've been looking at properties around the £90,000-£100,000 mark.

How much of that is the house deposit and how much is to cover moving costs such as transport, legal fees, furnishings etc? Would you have any kind of emergency or contingency fund once you have moved in?

I think you have two challenges at this stage. One is the amount of credit history that you have and the other is the fact that, on those figures, you are looking at a minimum deposit. Both of these will improve in time as this will give you a longer credit history and allow for extra savings toward the deposit & costs.

Candyapple

Daisy84 wrote: »

I was recently turned down for a mortgage (I'm a first time buyer) and was told by the mortgage advisor have a look at my credit score. I signed up to Equifax and was shocked to see my score is rated as 'poor'. I earn £38,000 per annum. I have car finance with about £1,000 left and a credit card that had £1,200 outstanding on it. I have always paid my bills on time and have never had any late payments. I always over pay my credit card monthly. The minimum is around £20 but I have a DD set up for £200 a month so I always pay back more. Other than my car and credit card the only other loan I have is my student one.
I also checked my score on Noddle and it was also coming out badly there. I don't understand why. I'm on the electoral roll where I currently live and have been here for nearly 3 years. I have no CCJs on my file or anything like that. I have noticed that I have a number of 'soft searches' for my mobile phone and car insurance could this be effecting the score? I'm really disheartened and don't really know where I have gone wrong. I have shown my credit file to a mortgage broker who has also said he doesn't understand why the score is coming out so low. can anyone help? Thank you

How old are you? If you are quite young it could be down to lack of credit history.

What 'pointers' did Equifax give as to the reasons why your score was poor?

Your mortgage adviser should have been more helpful than to point you in the direction of a pointless score that is used for marking purposes by credit reference agencies.

You should open an account with Noddle (Call Credit) and ClearScore (Equifax) both free and then pay £2 for a copy of your Experian report. http://www.experian.co.uk/consumer/statutory-report.html

Check if the info across all 3 is correct. Are you showing as being on the electoral roll on all 3? Is your bank account/mobile phone/credit card(s) etc. all showing across all 3?

Any financial associates on your credit reports?

'Soft' searches have no impact on your credit report. Only you can see them - not lenders, so it won't be that causing any negative factors.

Do you have any closed accounts on your reports? Some lenders like to see a history to see how you've run accounts in the past.

Have you been in your job for long?

Could the issue be affordability? If you're earning £38k, you're bringing in roughly under £2.5k every month. Which begs the question, why the low deposit?

Are you applying for the mortgage alone or with a partner? If with a partner, do they have a poor credit history?

Superscrooge

Not clearing your credit card balance each month is likely to give the impression you already have as much debt as you can handle.

No problems with making minimum payments, or not clearing the balance each month if you have a 0% or other promotional deal. But not clearing the balance each month on a card subject to high interest rates is usually viewed as a warning flag by lenders.

As Martin says - 'Set up a direct debit to pay the balance IN FULL each month'. I'm sure this will improve your chances next time you apply for credit.