Credir card paid in full each month affecting mortgage application

[Deleted User]

Sweetcake wrote: »

Yeah this makes sense. But this is what makes me waeary, I'm asaving to buy in the next 1-2 years, and sometimes I do think not having credit cards would be best in terms of when it comes to me buying , but then on the other hand it's like, 'showing that you can pay back credit is good' 'closing credit cards is bad' , so it's like, what does one do?

Don't let it make you tired. Using credit cards remains a good way to show you can handle credit. And clearing it in full shows you're financially astute.

If you stopped using them your every day expenditure doesn't go away. It just comes out of your current account.

Robsia2

Deleted_User wrote: »

If you stopped using them your every day expenditure doesn't go away. It just comes out of your current account.

Precisely my point - which is why it shouldn't matter.

I only use it to get airmiles. Before that I only ever used my debit card. It's not something I rely on, I could easily pay my outgoings out of my current account.

If I'd known it would cause a problem I would have stopped using it a few months ago to give the balance chance to truly get to zero before I applied for the mortgage.

Anyway, the girl who is handling my application at the broker has been off work sick for a couple of days (how very dare she!). So when I rang up today to find out what was happening, I ended up speaking to her manager. When I explained the situation he agreed that it shouldn't be considered and he said he will escalate it with someone higher up at Skipton and see if he can sort it out for me.

Fingers crossed.

Thrugelmir

Sweetcake wrote: »

Yeah this makes sense. But this is what makes me waeary, I'm asaving to buy in the next 1-2 years, and sometimes I do think not having credit cards would be best in terms of when it comes to me buying , but then on the other hand it's like, 'showing that you can pay back credit is good' 'closing credit cards is bad' , so it's like, what does one do?
Is it best to not have, or to have them but not use them for everyday expenditure, I've heard that showing a reliance on them for everyday expenditure is bad (which makes sense as you are essentially paying a month in arreas like the commenter above says)', I don't do this anyway but yeah....

Who benefits from the money you spend through a credit card? Rather than a debit card which carries much lower transaction fees. When companies such as General Motors entered the credit card market. Had nothing to do with peoples credit ratings!

[Deleted User]

Robsia2 wrote: »

Precisely my point - which is why it shouldn't matter.

It matters because people who can't even demonstrate they can repay a credit card are behind the curve if they want lenders to believe they can repay a mortgage on a monthly basis.

Robsia2

Deleted_User wrote: »

It matters because people who can't even demonstrate they can repay a credit card are behind the curve if they want lenders to believe they can repay a mortgage on a monthly basis.

I'm confused. I have paid it back in full every month for the last ten years. I have never paid a penny in interest because it's always paid in full, on time. Surely that makes me less risky, not more.

The expenditure on the card is expenditure I have anyway, the only difference is, it's coming out all at once rather than at the time of purchase, and only for the purposes of amassing air miles, no other reason. I'm not using a credit card because I can't afford the things I'm buying, hence, as the expenditure has already been declared during the affordability calculation, the fact it is paid by credit card and not by debit card should irrelevant, as it has already been declared.

Robsia2

I have just had a thought - I am an idiot for not thinking of it sooner.

If the problem is that there is always an outstanding balance on the CC because it's paid in arrears, then all I have to do is pay off what is outstanding right now, then not use the card again, bringing the balance truly to zero.

Well, actually I can't do that immediately as my debit card is non-functional - long story, but as soon as I get a new debit card I can.

Can it be that simple?

[Deleted User]

Robsia2 wrote: »

I'm confused. I have paid it back in full every month for the last ten years. I have never paid a penny in interest because it's always paid in full, on time. Surely that makes me less risky, not more.

Correct. That's what I've been telling you.

[Deleted User]

Robsia2 wrote: »

Can it be that simple?

I can't see it making any difference. They already see that you clear your balance in full each month.

Thrugelmir

Robsia2 wrote: »

Can it be that simple?

On a broader level referred to as the three D's. Death, Divorce or Distress (change in financial circumstances). Hence why unsecured lending in general is coming increasingly under the spotlight. Being a single pay packet away from a slippery slope isn't a healthy position to be in.

kingstreet

minimike2 wrote: »

Credit cards repaid in full monthly but then used for everyday expenditure are more and more commonly being INCLUDED in affordability assessments now. Assuming some of those who have commented have yet to experience this, but expect if you haven't, you soon will.

In theory, the debt isn't actually being repaid. It is just like having a hardcore overdraft. More to the point, the rationale is that all it takes is a major car repair, loss of a job, family event, etc etc and that person can choose not to pay that card in full that month. Thus becoming a revolving debt all of a sudden not being repaid.

Not sure on what the policy is at Skipton, but this is becoming a "thing".

Any names here, Mike?

I've not seen or heard this, so it sounds like lenders we don't use or don't use often. Even Santander don't do this and that's a lender which takes debt into account repaid in the last three months...