Improving credit scoring

tomegranate

Hi,

title should perhaps have read - Improving my mortgage prospects after previous refusal

I understand that lots of similar queries to this are posted, but I could do with some advice on my specific situation so I hope regulars won't mind me adding another request for help.

Early last year my partner and I bought a house together, however due (as far I can guess) to my credit rating and poor finances at the time we were unable to get a mortgage together. We agreed that the mortgage would be in her name only (we had a decent deposit between us, so she was fine and got a good rate for the amount we needed to borrow), with the intention that we would try and add me on after the first fixed-rate two years expired, so I would try to improve my mortgage prospects in the meantime.

At the time I still had a very poor credit rating (on Experian) due to defaults from about 7 years ago (I'd paid them off in full with a lump a couple of years before) which hadn't quite dropped off the radar and so were still having an effect on my score. I know now that credit scoring is not something to be relied on, but in any case I think it's safe to assume that the defaults, and the fact that my bank account was a bit of mess most months (i.e. running out of money most of the time), were the reasons that mortgage providers wouldn't touch me. It definitely wasn't affordability as the mortgage is very cheap (about 350 per month between us) and mine and my partner's incomes are about the same, both around 24-25k. The defaults subsequently disappeared from my records, and accordingly my Experian rating shot up. My finances are mostly hunky dory now - nothwithstanding living frugally to save up for a big trip at the end of the year!

I want to give myself the best chance of being attractive to mortgage providers so I could do with some specific advice on the most sensible way to proceed. I don't have any consumer credit products at all, have a current account (no overdraft facility) and saving account with Halifax. I think I'm considered to have a form of debt with my energy provider because account is being paid on instalments - though this is in positive balance now. Otherwise, my understanding is that I have no credit history, as far as any providers would assess me.

I understand that the usual approach would be to go for a dedicated credit building card. I've used the MSM calculator which tells me that I'd be likely to get loads of those cards, and also likely to get some 'standard' credit cards, but I want advice on whether applying for any of these would necessarily be the most sensible approach - particularly wanting to avoid the chance of rejection. I'm particularly wondering whether it would be better to apply for one with Halifax as I have my current account with them (so they 'know' me already and it would make it more straightforward to manage a card with them) I]AND[/I] because the mortgage is with them so, again it might help that they know me already, when we come to apply for me to be added onto the mortgage - assuming we don't change mortgage provider.

I could also do with some guidance about what size of credit limit to get, in terms of how it will change how mortgage providers will see me - I would ideally like to achieve a solid improvement by next summer, so would I be best getting something with, I dunno, 1000 quid limit, straightaway? Or might I be turned down for that much - would it be better to start with something piddling and wait to be invited to build it up?

I know a lot of users don't put much stock in credit scores, but I don't have an awful lot else to go on - which is partly why I'm asking for advice. For what it's worth, my current credit ratings are:
Experian: 929/999
Equifax: 442/600
Noddle: 571

Any suggestions? Apologies for the lengthy post, I didn't want to miss out any context that might be valuable. If anyone also has general mortgage advice based on my situation described, that would be appreciated - given my age (36) and the circumstances described, should we be confident that it would be straightforward enough for me to get onto the mortgage once I have positive credit history - although the current mortgage is easily affordable between us, we'd like to get a larger mortgage on the basis of both our incomes.

edit: I've picked out the key questions in bold.

[Deleted User]

Ignore the CRA scores and ratings.

Get a credit card and use it each month and pay it back in full.

Get a SIM only mobile contract as well.

This will build your credit history

[Deleted User]

Ignore all those scores. As you can see, they are far too high for someone with no positive credit history.

It's because credit scores, especially Experian, reward inertia, whereas lenders look for responsible borrowing.

Apply for a credit card. One or two searches are fine and declines are not recorded.

Use regularly and clear in full each month.

tomegranate

Thanks to both for the quick replies. Can you add any advice on the particular questions I've now put in bold, the main one being the most effective way to take out a credit card?

[Deleted User]

Any card will serve its purpose - use an eligibility checker and be guided by that.

The lender will let you know your credit limit once you are accepted. If you manage it responsibly, it is likely to grow over time.

In terms of your mortgage, build a good history, save as large a deposit as possible and have as large an income as possible. Those are the three key factors.

MEM62

tomegranate wrote: »

Can you add any advice on the particular questions I've now put in bold, the main one being the most effective way to take out a credit card?

Fill in an application.

[Deleted User]

Apply and see what you get offered.

No one know what credit limit you'll get until you apply.

Start with your own bank first, sure, or use an eligibility checker https://www.moneysavingexpert.com/eligibility/credit-cards/

litepay

Perhaps you can consider getting a card with some advantages e.g. a cashback or rewards credit card, or an airline credit card with no annual fees, then spend each month on it and pay it in full each month. Don't apply for a high limit, something like £1000 is more than enough to build credit history.

Willing2Learn

litepay wrote: »

Perhaps you can consider getting a card with some advantages e.g. a cashback or rewards credit card, or an airline credit card with no annual fees, then spend each month on it and pay it in full each month. Don't apply for a high limit, something like £1000 is more than enough to build credit history.

@OP

If you are thinking of applying for this type of product, then I recommend an Aqua Reward card, as it is sub-prime card, and is ideal for building a positive credit history.

tomegranate

Many thanks for the helpful responses, much appreciated.

Tom

Dobbibill

OP - before you apply you could ring Halifax and ask them if they can see if you would be eligible to apply - for the sake of one quick call it would save doing an application for no reason. If they give you a yes you can do the application online, if they say no you can take a chance elsewhere.
Can I suggest you set up a DD as soon as possible to pay in full so you never miss a payment by accident and set back all your hardwork when you do get a card.