Paying off credit cards

1337yorkshirelass

Hi, I currently have money on credit cards which I’m looking to pay a large chunk/most of this off and apply for a mortgage. I know that mortgage companies will do a credit check and be able to see I haven’t missed any payments but will the fact that I have previously had money on credit cards affect my chances of getting a mortgage or will the lender be satisfied I haven’t ever missed a payment and the debt is now paid?

MaryNB

1337yorkshirelass said:

Hi, I currently have money on credit cards which I’m looking to pay a large chunk/most of this off and apply for a mortgage. I know that mortgage companies will do a credit check and be able to see I haven’t missed any payments but will the fact that I have previously had money on credit cards affect my chances of getting a mortgage or will the lender be satisfied I haven’t ever missed a payment and the debt is now paid?

They'll be more concerned about your outgoings at the time of the application. If, for example, you're paying £400 back on loans and credit cards a month, that will affect how easily you can afford your mortgage repayments. It can take a while for credit reports to update so the updates might not be immediate. It'll be good if you can pay it off if you currently have a fair bit of debt. A small amount of debt won't be much of a concern. 

If you have been frequently close to you credit card limit recently this could have an impact. It's generally good practice to keep credit card utilisation to around the 30% mark but not sure how much a lender will take this into account if you've paid off all your debt. 

1337yorkshirelass

Thank you, I have quite a bit on credit cards but looking to reduce this significantly over the next couple of months and apply for a mortgage at the beginning of next year, so should only have a small amount on a credit card then and my reports should have updated to reflect that there is only a small amount outstanding.

1337yorkshirelass

@kingstreet just wondered if you knew the answer raised above as to whether lenders will see that you have previously been close to your credit limit against you, even if you have since significantly reduced or paid off the debt on a credit card? I’ve never missed a payment or had a late one

1337yorkshirelass

Sorry above should read …. Whether lenders will see that you have previously been close to your credit limit and hold that against you……

amnblog

No, don't worry about it.