Mortgage application & credit rating

Natsplus

Hi all,
I had some business debts in the form of a personal loan and credit cards accumulated over a couple of years. During the last month I paid it off with the help of a business loan that I acquired from my bank. 
We are thinking of moving house soon and wondering if large payments to credit cards and loan can be some sort of an issue when getting credit checked in a joint mortgage? 
When getting finances checked how far back do they see and will they raise questions about debts paid in recent months?

Fighter1986

Your credit file shows data going back six years. 

A lender may query large regular payments in and out of your bank account but largely they just want to be able to verify that what you're telling them is true. If there's a large regular payment out that you haven't disclosed on your application form (e.g. a standing order or direct debit for a loan) they'll want an explanation.

Was the business loan taken out in the name of a Limited Company with all the liability on the Limited Company? Or was it taken out in your name as a sole trader / partnership?

If the latter, the loan will still be considered a personal liability and will appear on your personal credit file.

Either way, if the monthly repayments for the loan are coming out of your personal current account, rather than as an expense coming form a business account, it'll need to be disclosed on your mortgage application. 

DCFC79

Dont worry about your rating as only you can see it, lenders see your history.

Natsplus

Fighter1986 said:

Your credit file shows data going back six years. 

A lender may query large regular payments in and out of your bank account but largely they just want to be able to verify that what you're telling them is true. If there's a large regular payment out that you haven't disclosed on your application form (e.g. a standing order or direct debit for a loan) they'll want an explanation.

Was the business loan taken out in the name of a Limited Company with all the liability on the Limited Company? Or was it taken out in your name as a sole trader / partnership?

If the latter, the loan will still be considered a personal liability and will appear on your personal credit file.

Either way, if the monthly repayments for the loan are coming out of your personal current account, rather than as an expense coming form a business account, it'll need to be disclosed on your mortgage application. 

The loan that I took out last month to clear all business debt on my personal account is a business loan for a limited company,  so nothing to do with my personal credit history.
But, the payments I have made in the last month to clear the debt, can they be a problem? I can explain the source of money and usage though. 

Fighter1986

I wouldn't expect the lenders to be concerned with where you paid your credit cards and loans off from, they're just making sure that what they find on your credit file and bank statements tallies with what you enter on your application form, so if you say you have no loan and CC balance, they'll expect your credit file to reflect that.

If you claim you have no monthly personal loan repayments, they'll expect your bank statement to reflect that.

It may take a while for your credit file to actually show the debts are settled though - keep an eye on your credit file via Equifax, Trans Union and Experian, and wait for your files to actually reflect the debt balances as £0 before applying for the mortgage. 

Natsplus

Fighter1986 said:

I wouldn't expect the lenders to be concerned with where you paid your credit cards and loans off from, they're just making sure that what they find on your credit file and bank statements tallies with what you enter on your application form, so if you say you have no loan and CC balance, they'll expect your credit file to reflect that.

If you claim you have no monthly personal loan repayments, they'll expect your bank statement to reflect that.

It may take a while for your credit file to actually show the debts are settled though - keep an eye on your credit file via Equifax, Trans Union and Experian, and wait for your files to actually reflect the debt balances as £0 before applying for the mortgage. 

You're a star!
Thanks