Credit card decision and effect on CR

SilverContractor

Hello

After being excluded form support from March 2020 to September 2020 when I managed to pick up a low paid temporary job my credit rating took a battering.  Initially on my biggest Credit card despite a payment holiday I paid enough to prevent it going over limit for as long as I could.  Eventually it still went over limit anyway.  On the low paid job progress was slow and I wasn't up to date until January/February this year.   In April I got a job in my old line of work and have been hammering my rolling credit ever since

My CR on experian is now just over halfway on green having dropped the total rolling credit plus loan balance below one of their thresholds.  Also the only searches for over 12 months is MSE and they are soft searches. Plus the last amber points are now just over six months ago.

The credit card with the biggest balance also has a interest rate of 31%. I am debating whether to apply for a 12 month 0% balance transfer card for as much of that as possible.  Would be a no brainer if it wasn't for the fact I am expecting to apply for a (probably small) mortgage before the end of the year

Question is should I risk having the new searches for a balance transfer so close to a potential mortgage application bearing in mind I am a Ltd co contractor, although current contract is umbrella,  so Mortgage applications are a bit specialised anyway

Any thoughts?

Thanks

bargainbetty

To be honest, I'd focus on getting the interest rate down as much as possible so would make the application. The markers for being over your agreed credit limit for a period of time are probably going to cause more damage to your chances of a mortgage than a hard search will at this stage. 

Hopefully, your mortgage specialist will be able to apply in terms of Covid disruption on those, but getting your debt to a better interest rate now will mean you can pay more of it off by the time you apply... 

MattMattMattUK

SilverContractor said:

Hello

After being excluded form support from March 2020 to September 2020 when I managed to pick up a low paid temporary job my credit rating took a battering.  Initially on my biggest Credit card despite a payment holiday I paid enough to prevent it going over limit for as long as I could.  Eventually it still went over limit anyway.  On the low paid job progress was slow and I wasn't up to date until January/February this year.   In April I got a job in my old line of work and have been hammering my rolling credit ever since

My CR on experian is now just over halfway on green having dropped the total rolling credit plus loan balance below one of their thresholds.  Also the only searches for over 12 months is MSE and they are soft searches. Plus the last amber points are now just over six months ago.

The credit card with the biggest balance also has a interest rate of 31%. I am debating whether to apply for a 12 month 0% balance transfer card for as much of that as possible.  Would be a no brainer if it wasn't for the fact I am expecting to apply for a (probably small) mortgage before the end of the year

Question is should I risk having the new searches for a balance transfer so close to a potential mortgage application bearing in mind I am a Ltd co contractor, although current contract is umbrella,  so Mortgage applications are a bit specialised anyway

Any thoughts?

Thanks

I am not sure how realistic a mortgage in a few months time is, my guess would be that in reality it will be the middle of next year before you stand a chance, let alone get anything reasonable.

Your credit rating (the number, the names or the colours) is meaningless and made up, your credit record is what matters. High debts cause issues, as do debts which begin to look persistent. It make sense to try and get the interest rate down, an application for a loan, approved or declined will have no different impact to your credit report than the debt itself, but you will be able to clear it quicker. 

It might also be worth a trip over to the Debt Free Wannabee board on this forum. Work through everything and get your expenses down to an absolute minimum so you can clear the debt as fast as possible and then following that build up a deposit. 

SilverContractor

bargainbetty said:

To be honest, I'd focus on getting the interest rate down as much as possible so would make the application. The markers for being over your agreed credit limit for a period of time are probably going to cause more damage to your chances of a mortgage than a hard search will at this stage. 

Hopefully, your mortgage specialist will be able to apply in terms of Covid disruption on those, but getting your debt to a better interest rate now will mean you can pay more of it off by the time you apply... 

Thanks.  I decided to go for it.   The new CC currently has most of my highest interest balance on it.  I could have asked to transfer more it turns out.  I wasn't expecting the limit to be so high.  will see if I can move the rest when I get the physical card and can start managing it.  The balance is coming down fast but will be faster without the high interest.

SilverContractor

@MattMattMattUK It wouldn't let me reply to your post.  Said it was suspicious

Thanks for the reply.  I applied and got the transfer card.  Just need to see about shifting some more onto it once it arrives.  I got a bigger limit than I was expecting.  Where I live has to be sold but I will only need a small mortgage based on current plans.  If I am really lucky I might be able to move without a mortgage.  I will check out the debtfree wannabee forum.  I have already cancelled some subscriptions and once I regain the cooking habit my weekly living costs will probably halve.

The hammering has been on the balance.  At no point this year has my total rolling credit balance gone up