Applying for current account ahead of mortgage application

Larches

Situation is this: we may need to apply for a mortgage sometime this year, and Mrs will probably be the sole applicant. However, in the meantime she'd like to switch her current account and we're wondering if this could adversely affect a later mortgage application, bearing in mind the following stats (from her MSE credit check):

Credit Accounts
    8 Accounts
    0 opened within 3 months
    1 opened within 6 months
    2 opened within 12 months
    2 older than 1 year
    4 closed accounts

Search History
    4 Searches
    2 could impact on score
    2 have no impact on score
    2 searches within 3 months
    3 searches within 6 months
    4 searches within 12 months

Experian score is 999 but debt to income ratio highlighted as an issue because she doesn't have any. So it seems she's in this strange situation where having no debt might be adversely affecting her credit status.

So things we're trying to figure out are:
- Is another account opening going to look bad so soon (about 2.5 months) after the last? The previous one had no overdraft, if that makes any difference.
- Which is it that potential lenders would regard favourably - having credit available but not necessarily using it, or having credit available and actually being in debt?
- So which would be better - applying for a new account with overdraft, causing a hard search but giving her more credit to her name... or skipping the overdraft (which she doesn't currently need) and avoiding the hard search but therefore not adding to her credit status? Or should she forget about it until the mortgage is sorted?

Maybe we really needn't worry if her score is already 999? Obviously when it comes down to it, the mortgage application will be way more important than switching current account, so we just don't want to do anything that could jeopardise that and reduce our chance of getting a good deal.

Any help from those in the know would be much appreciated!

FeaturelessVoid

For the sake of losing a house I wouldn't ever consider applying for a current account, regardless of any bonuses for switching, before a mortgage application.

It may make no difference but it'll eat away at you if you get declined and you have switched.

Switching bonuses aren't going anyehere soon, so buy the house and then, after a few months, apply for the new account.

[Deleted User]

Larches said:

Maybe we really needn't worry if her score is already 999? 

Be aware that her 999 score has no connection to her credit worthiness. It may mean she has a very thin file and therefore high risk. 

Make sure you're checking your actual files across all the CRAs, not just the pretend scores. 

Ebe_Scrooge

A current account will usually have little impact on your overall credit status - especially if it has no overdraft facility.  But for safety's sake, belt 'n' braces, you may be better off leaving it until your mortgage is completed.

Larches said:

- Which is it that potential lenders would regard favourably - having credit available but not necessarily using it, or having credit available and actually being in debt?

Neither :-:smile:   What they really like to see is well-managed credit utilisation - using your available credit and always repaying what you owe.  Avoid being in debt constantly.  Now, for something like a mortgage or a personal loan over 3 years, of course you're going to be carrying debt.  But as long as you're making the agreed payment every month, on time, that's basically seen as a good thing (although, they will take into account your overall indebtedness - so if you've already got a lot of outstanding debt they may be reluctant to lend you more, even though you're servicing your existing debt without any problems).

The usual suggestion, and probably the simplest, is to use credit cards.  Don't go applying for any new cards, but use the cards you have.  Use them for buying routine stuff like food or petrol or whatever - but never ever use them to buy something you can't really afford.  Pay the statement in full when it arrives each month.  Doing this, it'll cost you nothing in interest, and you're demonstrating that you can manage your available credit in a disciplined way, and can (hopefully!) be trusted to always repay what you owe.

In a nutshell - carrying debt on a credit card looks bad, it implies you're borrowing money you can't really afford.  It also costs you quite a bit in interest.  Using a credit card but always repaying in full every month looks good.

Sncjw

Why will the mortgage be solely in her name.. Would having both of you make the application stronger and you have more breathing space for the amount they are prepared to lend you.. 

Larches

Thanks everyone for your replies. It does sound like there's a bit of a risk there so best not to rock the boat. The current account switch can always wait.

Sncjw said:

Why will the mortgage be solely in her name.. Would having both of you make the application stronger and you have more breathing space for the amount they are prepared to lend you.. 

Well, that's what we originally agreed with our mortgage advisor because I wasn't in work, but Mrs's income would cover our needs anyway. I have resumed work since then though. My salary is a lot lower but I suppose anything helps so we could still make it a joint application if it means we might get more deals to choose from.