Will taking out a credit card help one day get a mortgage?

poro

Hello.

My bank earlier this year declined my application for a credit card, but I am wondering if I should peruse the idea of getting one or not in a few months maybe with someone else.

Does having a credit card, and paying it off IN FULL every month increase your chances of being given a mortgage in the future?

Are there any other positives of having one?

I have a trouble understanding all the jargon and leaflets. My knowledge is that you would spend on it in the month, keeping an eye on how much, then when you have the bill you pay it off IN FULL every month so you never have any debt on the card?

[Deleted User]

It will help you build a credit history so is highly recommended, as long as you clear in full each month.

Other benefits are section 75 protection, rewards, cashback, purchase and BT offers, additional interest on your own money, emergency access to a large amount of cash and so on.

Plus, if you're lucky, a snazzy design that will make lesser individuals swoon with jealousy when you slap it on the table at a restaurant.

Willing2Learn

poro wrote: »

Does having a credit card, and paying it off IN FULL every month increase your chances of being given a mortgage in the future?

Are there any other positives of having one?

I have a trouble understanding all the jargon and leaflets. My knowledge is that you would spend on it in the month, keeping an eye on how much, then when you have the bill you pay it off IN FULL every month so you never have any debt on the card?

Hi,

Yes, having a credit card and paying off the balance in full after receiving the monthly and before the due date is viewed positively by potential lenders.

With credit cards, it is best to set up a direct debit using the 'pay full balance' option. That way it always gets paid on time and cannot be forgotten.

If you have been turned down by your bank, then you might in the first instance, have to a apply for a sub-prime card, which is perfect for building a credit history. See the article linked below:
https://www.moneysavingexpert.com/credit-cards/bad-credit-credit-cards/

[Deleted User]

How soon are you looking to get a mortgage?
If you're declined for a CC then it's not likely you'll get accepted for a mortgage any time soon.

Have a look at some eligibility checkers to see what cards you do qualify for.

If accepted use the card each month for normal purchases and then pay in full after getting the statement - this shows you can pay back credit in full when borrowed.

spadoosh

Bullie is back.... INNNNN FULLLL.

Having a credit card or not will in all likelihood have no bearing on your ability to get a mortgage. Having a credit card is certainly not a prerequisite of getting a mortgage.

To get a mortgage a lender will want to see a number of thigns. First and foremost will be that they think you can afford it. They will make some assumptions and they will ask for your personal details. If they think you can afford it they will credit check, so theylll look at your credit report and look out for things like missed payments, defaults, CCJ's etc. They want to see a good history with any establishments you use (typically bank accounts). Some lenders will prefer the more risky people who have defaults and ccjs onthe basis they can charge them more others will prefer less risk so will only lend to those with near perfect credit records.

The only times i have ever paid a credit card off in full have been when im closing the account. I got a mortgage with no issues.

PRAISETHESUN

Having a credit card isn't a prerequisite to having a mortgage, but having a good credit history is. In order to demonstrate to lenders that you can manage credit responsibly and will actually pay back your mortgage, you need to be able to demonstrate that with other lending. A credit card is a very easy way to do this.

You might need to start with a sub-prime card (Aqua, Capital One, Vanquis, etc) if your current bank won't lend to you, to build up some initial credit history. Set up a direct debit to pay in full every month, otherwise the 30%+ interest rates will really hammer you, and will lead to late payment markers on your files - this shows lenders that you cannot manage credit responsibly, ie. the exact opposite of what you are trying to achieve here. Make your regular spending on the card, pay off in full every month and over time (probably 12-24 months) you should start to get offers to increase your credit limit, and be eligible for better cards. This will also translate into better rates, etc for your mortgage down the line.