Low credit score - mortgage application vs credit card application

StvC · 1 October 2018 at 6:33PM

Hi all. We're moving back to Blighty after a few years abroad and will be looking to buy asap. My question is, I know how to improve my credit rating but generally, is it easier to get a mortgage than say an overdraft? And is there a crossover point in loan to value where getting a mortgage becomes much easier, say if I borrowed 50% of purchase price vs a 95% or 90% mortgage...or do the companies use the same benchmarking.

I know the actual amounts were higher with a mortgage but from a risk point of view, surely a load secured against a house vs an unsecured amount is lower risk and more attractive?

Basically I know my rating is pretty trash but we have some capital from funds abroad, am I wasting my time even looking at houses on the internet for a good year or so?

[Deleted User] · 1 October 2018 at 6:39PM

Forget the scores and ratings as they’re made up.

You need to demonstrate a good credit history - get a credit card and use it for usual purchases and then pay it back in full each month following the statement being issued.

Also look to get a SIM only mobile contract.

After sometime (a couple of years at least) you would have built up a decent enough history for a mortgage

StvC · 1 October 2018 at 6:48PM

Fair, I've still had a mobile contract running the whole time (over ten years) and have a UK account with no overdraft, but my wife has been in hers for over 6 years since HBOS screwed us with fee hikes.
I just know that I applied for an overdraft a few times in the last 3 years and was rejected and there's some defaulted credit cards from about 4-5 years ago.
Plus, I don't pay cancellation charges on landline internet contracts or insurance as it's nonsense so I think they force my score down.

[Deleted User] · 1 October 2018 at 6:54PM

Again ignore the scores.

If you’re rejected for an overdraft you won’t get accepted for a mortgage.

If you have defaulted cards and you bury your head in the sand about contract termination charges that you actually agree to when taking out contracts then I would expect them to appear on your credit files as well as delinquent accounts, if indeed they reported to CRA’s.

And also these could end up with collection agencies who could also pursue CCJ’s.

What exactly is on all 3 of your credit files, especially in relation to defaulted accounts/accounts in arrears?

StvC · 1 October 2018 at 6:59PM

That's my next stage when I arrive back, I've got to get on the electoral roll as well. Just musing at the moment. What you say about an overdraft basically confirms my thoughts, which is fine. I can repair it all...I was just wondering on timescale as our current house isn't ideal so I wanted to know if I need to go private rent then build to mortgage or stick it out in less than ideal accommodation and go straight to somewhere we buy.

[Deleted User] · 1 October 2018 at 7:02PM

Depends on the state of your accounts on your credit file.

You’ll need to build a credit history and if you have defaulted accounts you’ll probably need to speak to a broker who specialises in individuals with adverse credit histories.

But expect to wait a couple of years and pay interest rates higher than the norm

Gingeraffe · 1 October 2018 at 7:18PM

StvC wrote: »

Hi all. We're moving back to Blighty after a few years abroad and will be looking to buy asap. My question is, I know how to improve my credit rating but generally, is it easier to get a mortgage than say an overdraft? And is there a crossover point in loan to value where getting a mortgage becomes much easier, say if I borrowed 50% of purchase price vs a 95% or 90% mortgage...or do the companies use the same benchmarking.

I know the actual amounts were higher with a mortgage but from a risk point of view, surely a load secured against a house vs an unsecured amount is lower risk and more attractive?

Basically I know my rating is pretty trash but we have some capital from funds abroad, am I wasting my time even looking at houses on the internet for a good year or so?

I'm in the same boat! Regardless of credit history, you wouldn't be able to get a mortgage immediately as you need to show steady employment.. It used to be 3 months but i think it's increased to 6 months.

StvC · 1 October 2018 at 8:24PM

yeah totally expected 3 month minimum...but also knew it might be 6 months. That's fine, we can work with that. Next step is to get the reports and get on the electoral role. Is there any point in getting equifax and callcredit or should i just get the experian one?