Joint mortgage application, one poor one excellent - pay my credit card or overdraft

ClaireRebecca132

Hi everyone,

I would really appreciate some advice on the below questions please!

My boyfriend and I are looking to apply for a mortgage in July this year and I have some questions as to how best to be ready for this. He has a credit score of 997 and mine is currently 523 which I know is poor. We have a deposit of £130k (although this is my boyfriends, and will come from the sale of his flat which hasn’t happened yet) and a combined income of £90k and are looking to borrow as much as possible.

I have poor credit due to three default payments and a couple of payday cash loans years ago. The pay day cash loans will reach 6 years old in March this year (so I believe will fall of my score) and one of my defaults will fall off in September (6 years old) and the other 2 in April & May 2020 and we don’t want to wait till then to buy.

Other than that all of my payments are regular I am paying my rent through credit ladder, I pay my credit card minimum payment and a bit more (£50) each month, am on the electoral role and have no other debt than my overdraft (below) and no CCJ’s. I have read that mortgage lenders will look at an affordability calculator as much as my credit score which I hope stands me in good stead as my current rent / bills are a lot more than my share of the mortgage will be and I have a good record of paying these, I have no default since 2014 and then it was £45 on a mobile phone default and £50 to BT for a disconnection charge I didn’t pay (I was stupid I know).

A few questions though:

Will getting my credit card to under 30% and my 2 payday loans falling off my score increase my score by 80 points or more – I want to get it to over 600 at least – ideally up to 620.

I am about to receive a £500 bonus from work which I am planning on putting in full on my credit card to get me under the 30% utilisation rate as above (which I read can increase my credit score by 60 points?) Is it better to put it on my overdraft though and pay off my credit card to the £900 and use it for day to day use (do they look at what I’m using it for or just the amount I am using?), or pay my credit card so I am under the 30% and leave it alone? Although this will mean still going in to my overdraft of £1000 in full each month – or thereabouts. I am trying to go no further than £900 in, and I am planning in paying both off in full as quickly as possible but I want to do this the right way to help our mortgage over the cost of it at the moment, and I’m aware that mortgage lenders will look at 3 – 6 months history not just the month of application. I can’t do a 0% balance transfer as I don’t have a good enough score for one.

Is my credit rating as important if I am not the main borrower (my salary is only £32k) and his rating is excellent, I am going on the mortgage to increase the amount we can borrow although I will be paying off the mortgage with him.

Any help on this will be massively appreciated as I want to be as prepared as possible for when we apply.

Thanks so much,

Claire

marliepanda

Your score and points are irrelevant, as the mortgage companies do not look and say 'oooof, you're only a 580, no'

They all assess your credit worthiness in their own ways, and do not care if you score is 1 or 999. Yes the REASONS for those scores interest them, but the scores don't matter.

ClaireRebecca132

Thanks marliepanda so in terms of my credit card / overdraft it doesn’t really matter which I pay off first as long as I’m paying them off is that right? Do you know anything re mortgages when one partner has a lower score if it is as important as applying for a solo mortgage?

csgohan4

the key now a days is affordability and how much debt you have as this will impact on how much you can borrow. Overdraft and credit loans will be treated the same, debt.


Also just as important is your ability to handle money and the use of pay day loans depending how recent will impact on this.


Going into your overdraft is generally not a good sign and shows poor management of money.


Hit the debt free wannabee forums to hit that debt.


You will need a good broker to look at your circumstances individually and you need your credit reports from the three main agencies for both you to hand to see.

Thrugelmir

ClaireRebecca132 wrote: »

I’m aware that mortgage lenders will look at 3 – 6 months history not just the month of application.

Lenders don't look they analyse. Using algorithms they assess the data from the last 72 months. Coupled with the information provided by your application. Lenders can profile you into a distinct category of borrower.

I'd suggest you set your first objective as clearing the overdraft and then staying out of an overdraft. Far too easy to drift and make excuses for oneself. Let the credit card run it's own downward course in the meanwhile.

ClaireRebecca132

Thank you very much! That’s really helpful x