From very poor to fair, chances for DIP?

ellioth

Hi guys
we are married young couple.
3 months ago we applied for DIP in HALIFAX, have been refused due to a lack of credit history and low credit score (It was the info from the broker.
We checked it and we had very poor rating everywhere, with no credit history at all.
We applied for the credit cards, have been accepted, right now we have 3 altogether.
Last month we have been accepted for pay monthly plan for our phones paid with direct debit.
On the 1st January we have checked and in the meantime our rating became "FAIR".
We have 5%deposit, we are FTB, for the moment there is only an option to apply in HALIFAX.
What do you think guys, is there a chance to be accepted for DIP right now when we have some months of the CC, utility bills and pay monthly plans history? No debts, no defaults, no bad records.
I will be grateful for your opinions and experience.

yksi

Stop looking at the rating of good/bad/poor whatever - it is not what the lenders are concerned about. That rating is invented by the agency to try to make you pay for their subscription.

Speak to your broker about your credit history and get more advice direct. A good broker will look at your three credit reports in total and know which lenders are likely to say yes. It will probably be a lesser-known lender and not a high street branch and your broker is the one who has the best advice.

BoGoF

You do realise all these recent credit applications are goong to count against you.

General advice is no new credit within 6 months of mortgage application (at least 6 months)

ellioth

@yksi The broker recommended applying again at the beginning of the new year (so literally right now) as he knew about our lack of credit history. Halifax is the only choice right now as we are in the UK for less than 3 years and they are able to borrow the money. The next thing is that as muy spouse is on a permanent contract, I am on the fixed term and adding all these ingredients the result is that only Halifax would be able to proceed.
Not-high street banks say that they need at least 3 years of living in the UK even when they accept lower scores.

The main thing is - we are now visible in the reports as we are using CCs and repaying them in full. I know why we have been refused DIP 3 months ago - it was literally nothing in history and that's why the bank didn't want to take the responsibility of giving the money to us.

The question is - if being visible in credit files with used-and-repaid credit cards, with all the utilities shown, can now lead to accepting us for Decision in Principle? As I said the main difference is that 3 months ago we had only bank accounts in the credit files and now we have all credit agreements - utilities, credit cards, monthly plans.

BoGoF

3 months is not a history.

Moneyminded

I think it unlikely that you would get a DIP after just 3 months of credit history. Mortgages are usually the most substantial amount of money you will ever borrow and lenders like to know how risky the decision to lend to you might be. With only 3 months worth of credit history a lender doesn't have much information to go on.

I'm surprised your lender thought that another application so soon would be advisable.

ellioth

We are in the UK a year and some of the utilities, bank accounts, and the electoral roll are showing on the credit files, therefore, the credit score was stable - very poor, but near to poor but without any bigger changes. That's why even going to mobile phone providers and wanting to take the lowest pay monthly plan, we have been declined. The main thing was that we have been unable to build history because of a lack of history, nobody wanted to give us THE FIRST credit agreement.
After being accepted CCs and repaying them on time, last month we even have been accepted to take the pay monthly plans without any problem, so it looks like the utilisation of the cards started to work.

Our broker had even worse situations and said that as the DIP issuing process depends strictly on the credit rating by the bank, it must be a little bit higher to be accepted.

That's why I am concerned if we could be accepted now

yksi

If three months of history is all you have, and only one is on a permanent contract, and you only have a 5% deposit, it really doesn't look likely for you just now. I think realistically you will have to wait quite a long time before you consider buying, but I'm not a broker so I could be wrong.

And if that broker really thinks it's worth applying now - with only three months of credit history - and thinks that only Halifax is available to you - to be honest I think I would find another broker and get another opinion. Don't make any applications yourself.

BoGoF

You do understand your credit 'score' means absolutely nothing in the UK. Neither does the poor or fair rating the Credit Reference Agency give you.

ACG

Just removed my post after reading the full thread.

[Deleted User]

3 years is a guideline for most lenders but certainly not a hard rule. I've just put a Romanian couple with a high street lender who had been in the country 8 months. 5% deposit as well actually.

Opening lots of credit has probably done more harm than good. Credit cards don't really have as big an impact on rating anymore. Seem to remember something about credit card companies changed something in the background so they weren't just used for this purpose. Should have just stuck an overdraft on your bank account and not used it. Would have had thr same effect on scoring

The fixed term contract is probably the harder one. How long is left on it? Has it been renewed before?