Improving credit for mortgage

Belowaveragejoe

Hi everyone,

Me and my husband are wanting to apply for a mortgage in around 8-12 months time.

Here is our situation;

-First time buyers
-We have a £35,000 deposit saved
-We want to borrow around £200,000 over 30 years
-Our household income is £51,520
-He works, I do not (stay a home Mum).
-His credit rating is Fair on both Experian and equifax
-my credit rating is fair on both Experian and equifax (though it was in the middle of good until I got my credit card).

-I have one credit card with a £500 limit, taken out last August, I never spend above £250 on it and make more than minimum repayments monthly. I also have a Very account (which I NEVER use) for £600.
-He has a £1800 overdraft which he does seem to live in, and a credit agreement for £4700 for a car, he’s (Just this week) taken it out (3.5yrs repayments at £189 pcm).

We have no other outstanding debt, no CCJs, etc. We are registered to vote, never miss rent payments.

Basically, we are pretty good with money (except the overdraft business!!)

We applied for a soft search AiP yesterday and were turned down- which is fine, we have the best part of a year to turn this around. I presume this is because my husband JUST took out credit and we don’t have “good” scores anyway.

I’m guessing getting out of the overdraft is the first thing to do? Should I close my pointless Very account? We won’t make any more credit searches between now and application...

But what else can we do? Is 8 months enough time for a good history of repayments on his car (plus by that point over a year of good repayments on my credit card)?

Is this all just a pipe dream? I’m feeling a bit deflated after saving for 15 years while paying extortionate rent- no family holidays, lean Christmases, all sacrificed to save this money.

Any help would be hugely appreciated!!
TIA

-Joanne

[Deleted User]

The main thing to do, as always, is ignore the pretend scores and ratings the CRAs give you.

To build a good history, you should be clearing your card debts fully each month. Making 'more than minimum payments' on a £250 balance tells lenders you have no spare cash at all, so couldn't afford a mortgage.

Also get out of the overdraft. Time will then do the rest if you manage your credit better going forward.

sourcrates

Belowaveragejoe wrote: »

-He has a £1800 overdraft which he does seem to live in, and a credit agreement for £4700 for a car, he!!!8217;s (Just this week) taken it out (3.5yrs repayments at £189 pcm).

The car may not be such an issue, but "living in his overdraught" certainly will be.

Banks, mortgage lenders look very hard at affordability, if they see he is always in his OD, that will set off alarm bells, ideally, they would want to see a good credit balance on his account every month, for a good period of time, otherwise where are the mortgage payments going to come from, his overdraught ???

I think not, if he earns north of 50k, where is all that money going ?

You need to address the spending firstly.

Thrugelmir

The number of dependents you have will impact affordability calculations for the mortgage.

-Our household income is £51,520

What's this made up of?

Belowaveragejoe

Hi all!

Thanks for your replies.

The money is my husband!!!8217;s wages and our son!!!8217;s DLA (minimal- £225 a month).

His money generally goes in my account as I look after the children, and the savings account is on my name so I stick our leftovers in there every month- hadn!!!8217;t considered the impact of his therefore living in the overdraft- but that!!!8217;s fine, we can completely address that- excellent insight, appreciated!

The credit card one frustrates me so much as everywhere gives me conflicting advice- pay minimum payments, pay the lot, pay more than the minimum.... I didnt know what to do to be honest!

That is fine though, I will make sure I clear it every month! Thanks for that too.

We have 3 children. Generally speaking we have around £500-750 a month to pop into savings, depending on all those things that come along like failed MOTs, school uniforms and the like!

- Joanne