Paying credit off early 26 January 2020 at 7:13PM in Credit file & ratings 2 replies 306 views

Jjamie

Hello! I’m looking at applying for a mortgage but the lender thinks I may be rejected on affordability. I have car finance and finance for a bike, I can pay the bike one off but it’s obly been running a few months.
My questions are, if I pay the bike off in full how will it affect my credit rating? Also if I extend the car finance payments to reduce the monthly payment amount will it have a negative credit impact?

On_my_way

If it is those two monthly payments that they think would affect your ability to pay the only way through is to pay one off so that you only have one that you can afford. 
What other expenses do you have? 

yksi

The rating is not a thing, lenders cannot see it. Ignore the score/rating. What they can see is your total access to credit, and they also see the information you submit with your application, where you would be telling them your monthly repayments on the bike and car. If you are struggling with affordability then yes, you should get rid of some of your monthly expenses, and that could include one of the vehicle finance agreements.

You should also read the sticky in here about credit ratings, and do a bit of reading about preparing for a mortgage. Getting bike finance in the 6 months before getting a mortgage is really not ideal timing, because banks can see that and their perfect customer is one who is easily able to afford what they want to borrow and is nice and stable financially (ie they want someone who hasn't had many financial changes recently). This is why people advise not to get new credit cards or loans for a good six months before applying for a mortgage. Since I presume you're using savings to pay out your bike finance, it might be a good idea to sit tight and save for a bit longer, to give yourself the best chance of the best mortgage deal.