Improving credit score for mortgage application

Pgray12_2

Hi all. First time poster so go easy. I have recently been saving loads (working 2 jobs) and saved about £2300. My parter (student with no income) and I wanted to buy our first home. Seen one at 45k, which probably get for 40ish as been on market long time. Thus I have the 5% deposit however my credit score is bad ( about 180 with clearscore). This resulted from bad choices a few years back, taking out credit then losing my job. Currently in an overdraft of 1.5k, but continually break the limit (something I have to work on) and 750 owed to another loan company (interest free). Question is would you use the 2300 savings and pay off the debts and hopefully improve credit score then save for deposit (however i will only have one job from now on with little spare each month) or try and pay down the debts each month and hope credit rating improves? I have tried to get a decision in principle for the mortgage but was declined, assuming because of my credit score. Any help would be appreciated

[Deleted User]

Get out of your overdraft ASAP. Living in it is bad enough, but breaching it is far worse.

Ignore your credit scores, but you need to demonstrate financial stability to potential lenders. No need to clear the loan if it's 0% interest (unless this is due to a default - why is it interest free?) but you need to show you're not living off credit.

YorkshireBoy

Pgray12 wrote: »

Hi all. First time poster so go easy. I have recently been saving loads (working 2 jobs) and saved about £2300. My parter (student with no income) and I wanted to buy our first home. Seen one at 45k, which probably get for 40ish as been on market long time. Thus I have the 5% deposit however my credit score is bad ( about 180 with clearscore). This resulted from bad choices a few years back, taking out credit then losing my job. Currently in an overdraft of 1.5k, but continually break the limit (something I have to work on) and 750 owed to another loan company (interest free). Question is would you use the 2300 savings and pay off the debts and hopefully improve credit score then save for deposit (however i will only have one job from now on with little spare each month) or try and pay down the debts each month and hope credit rating improves? I have tried to get a decision in principle for the mortgage but was declined, assuming because of my credit score. Any help would be appreciated

Log off here now, go to your bank (or visit them online), and use the savings to pay the debts off!

worried_jim

YorkshireBoy wrote: »

Log off here now, go to your bank (or visit them online), and use the savings to pay the debts off!

Do it today. Now.

MEM62

Ignore your score - it is a randomly generated number and therefore meaningless. It is your credit history that matters.

You have £2,300 in savings and debts of £2,250 it suggests that you have 'saved' by borrowing money elsewhere. In reality, your net savings are £50. I would suggest that you clear your debt and start saving again - without incurring the debt.

Pgray12_2

Ok guys thanks for the responses. Will clear the debt and start saving with help to buy. Suppose I just wanted a shortcut to home ownership and reduce costs of rent etc. Thanks again

National_Debtline

There’s a big focus on affordability for mortgage applications these days. i.e. if the interest rates increased would you still be able to afford the mortgage payments?

I agree that paying off your debts with your savings is the best move. You’ll pay less interest on the overdraft, and have a better chance of demonstrating affordability without the monthly debt payments.

James
@natdebtline

MHOWARD_2

I really need to move, a home for 45k!

Sorry to but in but I found that unbelievable, where I live you would be hard pressed to find one at six times that and that would be small as well.