Would CC utilisation affect a mortgage application?

spood11

We're currently with Nationwide and were looking to port our mortgage with them (and increasing our mortgage amount). I filled in all of the income/expenditure details and it come back with a potential figure they could lend up to. I then ran the soft credit search which come back as a decline.

When I'm checking our credit reports the only thing that is showing 'needs work' is our credit utilisation. For the past 9 months we've been snowballing our CCs and closing as soon as they're paid but it looks as though this was the wrong thing to do and maybe I should have been sending funds to all of the cards to bring their balances down equally (and keeping the cards open so the utilisation looked better).

Does anyone know whether the utilisation would be the sticking point here? I thought about ringing Nationwide but I know they're probably not going to tell me what their lending criteria is. I just don't know whether to continue the snowballing or not.

Thanks for any advice you can give me. 

[Deleted User]

It can do, but things would look much worse if you weren't snowballing (ie paying the highest rate debt) as your utilisation would be higher due the balance going down more slowly.

However, closing old cards is rarely a good idea, so stop that. Show lenders that other lenders trust you, not that they'll snatch your card away the second they get their money back.

sparklep0ny

Your outstanding debt is going to have a far bigger impact on your chances of getting a mortgage than your utilisation.

Emmia

By increasing your mortgage when you're choosing to port, whilst carrying credit card debt from month to month, means that you're increasing your debts, but reducing your "free cash" since your monthly payments would presumably also rise as you'd be borrowing more...

Basically from the Bank's perspective you're a riskier bet... They may have also tightened their lending criteria (e.g. they could exclude anyone with a credit card balance that isn't paid in full every month) since you obtained the mortgage originally which could also go against you.