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]

Comments on your duplicate thread. 

https://forums.moneysavingexpert.com/discussion/6267123/would-cc-utilisation-affect-a-mortgage-application#latest

K_S

@spood11 What LTV was the DIP run at?

Looks like you failed the "credit scoring" that Nationwide did (not to be confused with the Experian/Clearscore/CreditKarma/CheckMyFile scores). It's kind of a dark art (even to us brokers) and involves a lot of different factors so it's hard to say that how much of an impact the credit utilisation has on it. From my experience, it's never been a material factor by itself.

Just because Nationwide has declined the DIP doesn't mean it'll be the same result with all the other mainstream lenders who are equally competitive on rates.

spood11

Thanks for your reply, the DIP was based on an 84% LTV. 

K_S

spood11 said:

Thanks for your reply, the DIP was based on an 84% LTV. 

@spood11 It's unlikely Nationwide will give you any further information but you might as well give them a call to see what they say the reason was.

TVAS

I am with MSE credit rating thingy. If I repay a credit card debt in full not the minimum payment I get an email thereafter saying your score has changed. 
What is your credit rating?
Are your middle names on your bank account? This made a difference to me.
Are you on the voters roll?
Can you go to your local Nationwide branch and speak to the mortgage people? Even if they turn your down ask them what you need to do to improve your chances of a new mortgages generally. 
I wish lenders would just tell you what to do rather than bloody guessing.

spood11

TVAS said:

I am with MSE credit rating thingy. If I repay a credit card debt in full not the minimum payment I get an email thereafter saying your score has changed. 
What is your credit rating?
Are your middle names on your bank account? This made a difference to me.
Are you on the voters roll?
Can you go to your local Nationwide branch and speak to the mortgage people? Even if they turn your down ask them what you need to do to improve your chances of a new mortgages generally. 
I wish lenders would just tell you what to do rather than bloody guessing.

811/999 on Experian and 439/700 on Clear Score so not great, but all they're advising for improvement is the utilisation. I 100% agree about the lenders, it's all cloak and dagger when it comes to stuff like this.  Their affordability calculator gave me an amount they'd lend us based on all of our debts/outgoing but then it fell down at the soft search. I'm calling nationwide today to see if they can shed any light on the situation.

Thanks for all of your replies to this 😊

goodwithsaving

I use my credit cards but pay them off in full each month, so don't need to provide statements etc. on mortgage application. Are you increasing the amount you have remaining on them each month? Could be other factors. If you already have a mortgage and are porting, their calculators aren't effective. Best to go via a broker and get them to do an AIP/DIP via the intermediary access.

Nebulous2

Why are you closing the cards?
That will make your utilisation look worse. If they have reasonable limits it would make sense to keep them open. Put a payment through them once in a while to keep them live, and pay the balance in full.  

Thrugelmir

spood11 said:

TVAS said:

I am with MSE credit rating thingy. If I repay a credit card debt in full not the minimum payment I get an email thereafter saying your score has changed. 
What is your credit rating?
Are your middle names on your bank account? This made a difference to me.
Are you on the voters roll?
Can you go to your local Nationwide branch and speak to the mortgage people? Even if they turn your down ask them what you need to do to improve your chances of a new mortgages generally. 
I wish lenders would just tell you what to do rather than bloody guessing.

I 100% agree about the lenders, it's all cloak and dagger when it comes to stuff like this.  

Nothing cloak and and dagger. All statistically risk modelled and driven. Algorithms are used to analyse the past 72 months of credit data history that the CRA's have compiled and is accessible to the lender. Coupled with other factors relating to your personal circumstances such as electoral roll history, nature of employment, length of time in employment, time with bankers etc etc. Lenders will bench mark you against their internally set criteria. In effect you need to jump the hurdles. 

Continue to pay down and shut down the excess credit facilities that you have. There's no quick fixes. Time heals as they say. Lenders need to see that the change is permanent and not just temporary. 

Lending criteria is commercially sensitive. No lender (well at least the staff you talk to) is going to be able to explain precisely where you failed. More than likely it's a combination of factors. Criteria will constantly be tweaked depending on the lenders appetite for risk and the funds they have available to advance.