Refused mortgage application

opensesame

Dear all,

I hope this is the right place to be posting this query - I'm sorry if not.

Long story short, I was refused a mortgage application last weekend, and was really surprised about it. I was wondering whether anybody here could offer an insight into why.

First, about me. I earn over £50k gross a year and have a largely good credit history. I haven't used my overdraft (£3000) for 2+ years, and I have three credit cards, one with a limit of around 6000 and another with a limit of around 4000, both of which I never use. The other has an 800 limit and I use that to buy petrol each month and clear it each pay day.

The only explanations I can think of for being refused are:

-I have a single default on my credit record, for around £60. This arose out of a dispute with British Gas; I thought the money was owed by a previous tenant at my current property and eventually paid when they finally produced evidence, but that process took a very long time and somewhere along the line the account became listed as defaulted. It's now "settled" on my credit record.
-Because we had an unexpectedly expensive Christmas, I had used my credit card with an £800 limit a bit more than normal and borrowed around £600 on it. I've now paid off half of that and will pay the rest off next month. But I wonder if, at the time of making my mortgage application, the fact that I had borrowed to close to the limit of one of my cards might have been flagged?

Which of these is more likely to have harmed my chances? As I say, I was very surprised, because I've never had difficulties getting credit before, and have a good credit history apart from that single default.

bamgbost

Most likely the default.
And this likelihood increases the more recent it was. (i.e. in last 2 years!)

Nebulous2

Nobody here can really tell, but we can take some educated guesses.

Did you use a broker? An adverse credit one? Some lenders wont lend to people with defaults. A broker will know which.

There are no need to answer these questions - they are more to get you thinking about how you can improve your circumstances.

Are you on the electoral roll?

What percentage deposit do you have? The bigger the better, but possibly looking at 15% with a recent default.

Have you checked all 3 credit accounts to see what is on there? In addition to the default things like late payments will have an impact.

How is affordability? If you're pushing your luck any adverse will possibly push it over the edge.

Credit cards seem ok, limits are a bit low for your salary, but any other debt? Car loans etc. They will impact as well.

cjmillsnun

Get a copy of all 3 CRA reports. The fact that you call the default "settled" rather than "satisfied" tells me you have an equifax based report. You also need Experian (use MSE Credit Club) and Call Credit (use Noddle) to get everything.

Go through each of them with a fine tooth comb. Make sure every detail is correct. Query it with the lender if it isn't. Bear in mind if you have paid anything late, then that will be flagged and be correct.

Find a broker that specialises in adverse credit. I don't know the age of default, but if it is under 3 years old, it will put most lenders off. Over 3 years and you will find the number of lenders will open up.

Some more thoughts.

How much was the Mortgage for?

Is your 50k+ a basic salary or does it depend on overtime/sales bonuses, etc?

You mention we... What is the other applicant's credit position?

How much deposit do you have?

All will help lenders guide their decision.

Thrugelmir

You say "we" in your post. Yet refer to a sole mortgage application.

Expanding your personal circumstances a little would help people to make informed comments.

kingstreet

Ask the lender concerned for the reason you were declined?