Trying to improve credit score for mortgage

hannahvictoria

Hiya,


apologies if this is the wrong place for this! Needing some advice on building credit score for mortgage application in a few months time.


I am currently private renting, but moving back in with my parents to save more towards our house deposit, so will have much more disposable income come May.


My current situation is:


I had a loan a few years back, I have paid £140 monthly since, never missed or late payment, and this has a balance of £1446 left so will be paid off by March 2020.


I also have 2 'Very' accounts, one with a balance of £900 and a credit limit of £1000 that I pay £39.48 off per month, one with a balance remaining of £55, and credit limit of £600. I have paid £55 monthly of this account to get it down from £1000+. Payments are always made on time.

• would it be better to leave the account with a £600 limit open after I have paid this off so all my credit isn't utilized?
• would it be wise to pay a big chunk of the £900 balance off next month? say £450? so that my balance is £450 but limit of £500?

I have taken out a capital one credit card with a £300 credit limit, that I have one bill coming from a month and the full balance is paid of each month.


I also have a HSBC bank account I didn't even know still existed, which has not been used for years and is still tied to my first address. Will closing this benefit my score or not?


My fianc! and I are hoping to apply for a mortgage in August, we have done the affordability checks and all come back fine (which I know doesn't really count for anything until mortgage in principle is done), his credit score is in the excellent range, mine is high end of fair (836, and I am basically trying to boost it up as much as possible in the short space of time left.


Help would be MASSIVELY appreciated!


Thanks x

[Deleted User]

You can ignore the scores as lenders do not see or use them

A demonstration of managing a good credit history is what a lender will look for, such as no late payments, arrears, defaults, CCJ's etc.

Clear the balances on the credit accounts ASAP and ideally get the loan cleared and paid off as well.

Use the credit card monthly and pay it back in full each month as well.

Nasqueron

Lenders judge how much to lend and indeed, if they will lend, based on your credit history (not the score). If you have a lot of debt and are struggling to pay it off (or appear to be - such as having a large balance on a credit account and paying it off very slowly) then they will lend less (or may judge the mortgage to be unaffordable).


Keep paying off the card in full every month, pay off the account debt and then speak to a broker


Ignore the score, no lender will ever see it and it is not in any way an indication of how a lender will see you

hannahvictoria

Nasqueron wrote: »

Lenders judge how much to lend and indeed, if they will lend, based on your credit history (not the score). If you have a lot of debt and are struggling to pay it off (or appear to be - such as having a large balance on a credit account and paying it off very slowly) then they will lend less (or may judge the mortgage to be unaffordable).


Keep paying off the card in full every month, pay off the account debt and then speak to a broker


Ignore the score, no lender will ever see it and it is not in any way an indication of how a lender will see you

Okay so I only have one payment of £55 remaining on the very account, so had I may as well pay this next month as normal and get the account closed down? Then next month I can pay a large chunk of the other off.

Yep I'm currently using £60 a month on the credit card, and then its getting paid off in full each month.


Thank you!

macman

There's no need to close all the credit accounts. What lenders are looking for is a record of credit being taken, and repaid on time. The bank account is not a credit account, but you should either close it or update the address on it.
Crucially, are you on the electoral roll at your current address?
As others have stated, your credit score is a fictitious number that has no relevance at all. What matters is your credit history.

hannahvictoria

macman wrote: »

There's no need to close all the credit accounts. What lenders are looking for is a record of credit being taken, and repaid on time. The bank account is not a credit account, but you should either close it or update the address on it.
Crucially, are you on the electoral roll at your current address?
As others have stated, your credit score is a fictitious number that has no relevance at all. What matters is your credit history.

I think I'll close it anyway as I didn't even know it was still open!


Yep I am on electoral roll, at my current address.


So if I was to pay my very accounts off over the next 2 months, so £950, would this look good to mortgage lenders when it comes to it a few months down the line?


Thanks x

[Deleted User]

£950 is not much in the gran scheme of things.

The loan may be something that will hold you back.

And to only get a credit card with a £300 limit on it - do you think you'll get a mortgage in the tens or hundreds of thousands?

hannahvictoria

It’s a credit builder credit card I only got a couple of months ago, so I’ve no option but to only have the £300?

[Deleted User]

I get that.

But if you’re not being accepted for mainstream cards with higher limits then you need to think about whether you’re eligible for a mortgage at this stage

Ben8282

1. Change the address of the HSBC account to your current address. Having it registered to a different address could cause confusion or difficulties.
2. Reduce balances as best you can. The less money you owe at the time of applying for a mortgage the better.
3. There is no need to close any accounts. Presumably the loan account will close automatically when fully repaid.
4. Avoid any missed payments or other poor account conduct.

hannahvictoria

!!! wrote: »

I get that.

But if you’re not being accepted for mainstream cards with higher limits then you need to think about whether you’re eligible for a mortgage at this stage

Hiya,


yep understood, I haven't even tried to apply for different cards to be honest. I just wanted a credit card to build up my credit score so went for the easiest option.