Timing of getting a new credit card?

Lily_123

Hello, looking for some advice please.

We are looking to buy a house in the near future. We have a deposit, DIP and I currently have an ‘excellent’ credit score.

The 0% interest credit period on my credit card has come to an end and I would like to get a new one to use in mid January to make a planned purchase. I’ve been putting off applying whilst we are house hunting as I’ve read that applying for too much credit at once can negatively impact a mortgage application. However the market has dried up in our area and we are halting our house search until new properties come on the market in the new year.

This planned purchase is a nessesity and I have a large amount of the money to pay off a credit card straight away and would plan to pay off the full amount by March.

My question is if I apply for a new credit card now would this impact my mortgage application hugely or should I hold off on applying for any credit at all whilst we are looking to buy a house?

Also I will no longer be using my current credit card as the 0% interest period has finished, should I cancel it or not? Would this affect a mortgage application or affect my getting approved for more credit in the near future?

I’m very new to all this and until 2 years ago had never had any credit (other than student loans) so I would appreaciate any advice towards putting me in the best position towards getting accepted for a mortgage in the near future.

Thank you in advance

[Deleted User]

You don’t have an excellent credit score - no one does as they’re made up.

If you’re planning on buying in the next few months then I wouldn’t apply for a credit card now.

What is this “essential purchase” that needs to be made?

Lily_123

Hi Gary, thank you for your reply. I said ‘excellent’ as that’s from a standard Experian check. I’m under no illusion that they are not strictly accurate in real terms. Like I said I’m still learning my way around managing finances efficiently.

The essential purchase is essential enough that it will need to be spent regardless of which way I end up sorting payment. That’s why I was asking for advice on my best option.

SnuggleBuggles

My opinion, for what its worth, is definitely don't apply for new credit while you're preparing for a mortgage application. I note you say the property market has dried up in your area and you're delaying your property search until the new year (in essence only a few weeks away). The house of your dreams could suddenly become available, you don't want to jeopardise it with an avoidable hard search on your credit file.

I note your planned purchase is essential. My options would be to speak to your current credit card lender to see if they can extend your % offer on account of you being a valued customer. It's a long shot but it's worth a try. Alternatively, make the purchase as planned. Pay off as much as you can (you say you have the majority of the required funds). The remainder I would swallow the interest on (if you time it right there won't be much incurred between Jan and March when you plan to settle in full).

I would advise against cancelling your current credit card.

Good luck with your property hunt.

Nebulous2

I'd post, or better still get this moved to the mortgage forum. There are a lot of brokers post there.

Lenders don't like changes, particularly mid-application. A new account appearing with a balance on it may be enough to prompt additional checks, or if your affordability is very tight, trigger a rejection.

If you could open the card, make your payment, pay it off and have a couple of months clear before applying I think you would be fine, or at least that card wouldn't be the problem. Otherwise maybe you should use your deposit to make the payment, or if you want credit card protection pay it on the card you have then use your deposit to pay it off before accruing interest.

Don't close the existing card. Keep it, make an occasional small purchase and pay it off in full.

Craig1981

how much is your purchase for, whats the card APR and what will be the balance after your lumpsum?

if you have a large chunk to pay it off immediately, and fully by March, dependant on the balance, it may be better for you to pay some interest for the next few months until cleared off. a bit of interest may be more beneficial than a new application so close to you wanting to get a mortgage

you say house search is halted, but what if dream home one comes up in two weeks?

i know nobody (well majority) dont like paying interest, but in this case, it is something i would do. again, depends on the actual amount being carried over to March - use an interest calculator to see what it will cost you to pay interest on this item.

just my opinion

Lily_123

Thank you everyone, I’ve decided to not use a credit card and just make the full payment in one. Using a credit card just allowed me to spread the payments but as it’s so close (hopefully close) to us starting a mortgage application I will just take the hit and tighten my belt.

In terms of the house search, I say it’s halted but that’s still not stopped me looking at rightmove every day in the hope that the dream house will come up!

I looked into what the interest would be to just use my current credit card and it’s a lot to say I would only be borrowing for a couple of months and as I’m thankfully in a position to pay it all off if i am careful then I think that’s the safest bet given the timing of everything. Thank you again!