Would it help our chances for a mortgage if we have a credit card?

thermal2844

Both my OH and myself have somewhat thin credit files as we do not use credit cards. Everything else is fine and always paid on time (utilities, phone contract, rent, etc) so we have nothing adverse on our records, but our scores are fairly low due to lack of credit card history. Would it help our mortgage chances to have a credit card so that we could bulk up our credit history? (Low balance paid off in full each month). If so, what sort of time frame would we need to leave between the credit app and the mortgage app?

Candyapple

thermal2844 wrote: »

Would it help our mortgage chances to have a credit card so that we could bulk up our credit history? (Low balance paid off in full each month). If so, what sort of time frame would we need to leave between the credit app and the mortgage app?

Yes it would definitely help. Ideally you want as long as possible because the longer your history is, it shows you can handle credit responsibly. I'd say 1 year minimum, anything less than that then you've missed the boat as the last thing you want before a mortgage application is any hard searches or new accounts open.

Your rent and utilities don't get recorded on your credit history. But any bank accounts, mobile phone etc does. Make sure you are also on the electoral roll and that it shows across all 3 agencies (Experian, Equifax, Call Credit).

thermal2844

Thanks so much Candyapple, that was really informative and helpful.

Thrugelmir

Ignore your scores. Simply behaving normally and managing your personal affairs well will suffice.

thermal2844

Thank you Thrugelmir, that's good to know, and reassuring.

GeorgeP93

I’ve wondered this as well. I don’t have a credit card and don’t really want one purely because without one I know I’m living within my budget.

People have told me to get one and others have told me not too bother. I’m hoping to buy this year so after reading this I’m not going to bother. Have you had any loans in the past? A car in finance or anything along those lines? I’ve brought stuff in the past that I could have just paid for but because they were offering 0% finance I’ve used that and it shows on my credit reports.

AnotherJoe

GeorgeP93 wrote: »

I’ve wondered this as well. I don’t have a credit card and don’t really want one purely because without one I know I’m living within my budget.

People have told me to get one and others have told me not too bother. I’m hoping to buy this year so after reading this I’m not going to bother. Have you had any loans in the past? A car in finance or anything along those lines? I’ve brought stuff in the past that I could have just paid for but because they were offering 0% finance I’ve used that and it shows on my credit reports.

You can live within your budget with a credit card as well, just pay off the full amount every month, this can be done automatically, and in addition gives you various consumer rights you dont have with cash plus various cash back /airmiles schemes, all for nothing.

Its no different to the 0% finance you used, but every month, on pretty much everything. If that was such good deal for a one-off purchase why isnt it a good deal on all purchases all the time?

robatwork

Martin has often said that having a credit card and paying it off in full every month definitely helps present you as a "good credit citizen" to the banks.

Without the banks spelling out their exact criteria, which they will never do, I would go with that advice.