Stoozing effect on Credit Score 26 May 2020 at 7:34PM in Stoozing: free cash from credit cards 3 replies 513 views

LittleNinja

I'm in the early stages of looking to get a mortgage. I've got a copy of my credit report and the credit agreement section is "amber". I'm not entirely sure why - I had one late payment in 2016. However, my partner had one late payment in 2019 and is in the green. 

Is it possible that the two credit cards on 0% interest are the problem? I haven't used either in a while as I'm just letting the interest build up in savings. The total amount on them is just under £3k. I can pay them off now if it is causing a problem but would prefer to wait until the 0% period is up in November. 

daivid

You may be better off posting in 'mortgages and endowments' section of the forum, you're more likely to get responses and I think the mortgage takes precedence over the stoozing (though they are linked).

I've never looked at my credit report, from what I understand they are pointless if you have a decent credit history. Lenders do not look at the reports, they look at financial histories and affordability. The money on 0% cards will impact your affordability as you are committed to making payments so if affordability is tight it could be an issue, whether or not lenders see it as risky behavior and would be put off I couldn't say. If all else is good I doubt your stoozing will be an issue, if other aspects are tight it could be the straw that breaks the camel's back.

I'm assuming you are a first time buyer, my (totally amateur) advice would be to forget the credit report and look into who will lend and how much. Either engage a mortgage broker or go direct to a lender you think might suit, go through all the background details to see if you meet the criteria then see if you can get a mortgage in principle. If you can (and for the amount you want/need) that's a big positive, if not start looking at why.

jonnygee2

Is it possible that the two credit cards on 0% interest are the problem? I haven't used either in a while as I'm just letting the interest build up in savings. The total amount on them is just under £3k. 

Yes, this will affect how lenders will lend to you. The general ideal scenario is that you 'cycle' about 10 - 25% of your total credit limit, showing that you both use your cards and are able to pay it off.

Having a long term debt on a credit card makes it look like you can't pay it off - the interest rate isn't on the report, so they don't know it's at 0% and will assume you are just paying minimum payments and accruing interest. 

But, these factors are more important when you apply for credit cards or short term loans than mortgages. For a mortgage, the main check is whether you can afford to pay the monthly payments. Repayment history is also important, but they are less interested in smaller details like this.

This is why a single credit 'score' is deceptive - different products and lenders take different factors into account.

Still, I would pay off the credit card before applying for a mortgage - or they might take the monthly payments out when they calculate how much you can afford to repay each month - reducing the amount you can borrow overall.

[Deleted User]

jonnygee2 said:

Is it possible that the two credit cards on 0% interest are the problem? I haven't used either in a while as I'm just letting the interest build up in savings. The total amount on them is just under £3k. 

Having a long term debt on a credit card makes it look like you can't pay it off - the interest rate isn't on the report, so they don't know it's at 0% and will assume you are just paying minimum payments and accruing interest. 

You're right that specific APRs aren't shown, but of course the promotional rate marker will appear.

However, I agree in general it's better to go into a mortgage application with as little debt as possible, even if at 0%.