Am I best to clear credit cards with loan before or after applying for mortgage?

Katiebrown

Hi,
I have 3 credit cards with totalling balances of £15k. The combined credit limit is £31k which is marking a negative on my credit score. I'd like to clear the cards with 1 loan for £15k for both lower rate and convenience but I'm planning to move house (I already own my property with a mortgage) and wonder am I best to clear the cards and obtain the loan before or after the re-mortgage/ house move? Will it benefit my credit score to sort the cards first leaving me in a better position for the mortgage?
Thanks

[Deleted User]

Who knows - since the score is irrrlevant.

No on sees the score but you - what is relevant however is the data on your file.

Would you take a secured or unsecured loan?

Also applying for the loan will add a hard search on your file

Sncjw

Also applying for a loan will double the debt. They will treat it as 30k when you apply for the loan as no garuntee you will pay the cards off with the loan

Superscrooge

Paying off some of the debt will improve your mortgage chances rather than just shuffling the debt from one lender to another.

Sarastro

Sncjw wrote: »

Also applying for a loan will double the debt. They will treat it as 30k when you apply for the loan as no garuntee you will pay the cards off with the loan

Unless of course she does pay them off in which case they won't be there.

Advice above is sound though, paying the debt off will be more effective in improving your credit score than moving the debt around.

[Deleted User]

Depending on your income you may fail an affordability test for the mortgage anyway, your best course of action will be to try as hard as you can to reduce your level of CC debt

[Deleted User]

Buy why are we advising to improve the score?

The advice should be to reduce the debt to credit ratio

dj1471

Credit scores are irrelevant, every lender scores differently. Having £15k of debt will reduce the amount a mortgage lender will give you, this should be your main concern.

Applying for a loan (or any kind of credit) prior to a mortgage application is ill-advised. If you can't afford to clear the debt it'd be better to extend the new mortgage to pay these off, if possible, as this is likely to be cheaper than a loan.

Sncjw

She would be doubling the debt as that’s what the lenders would be assessing her on to see if she could afford repayments