Improving credit score report - Debt to Income Ratio

Roseiswell

Hi everyone,

I just did my Experian check on here through MSE Credit Club.  My general credit score is very good 969.  My credit card affordability rating came back as 'Good', but my loan affordability came back only as 'Fair'.  I also seem to be having an issue with my Debt to Income Ratio (Amber rating). I have a credit card but have only used a couple of times in the last few years.  On the report it says:

"Debt to income ratio

This amber rating could be for one of two reasons – your debts are either quite high compared with your income, or 'too low'. If you have quite high debts compared with your annual income, this could be a red flag for lenders as they may have doubts about your ability to repay if they lend to you. Consider whether you’re able to pay off any of the debt you already have before applying for more.If this doesn’t sound like you, then this amber status may be because you have little or no credit. Bizarrely, this can put lenders off, because if you don’t have any credit, they don’t have a reliable indicator of whether you handle it well. Without this, you may be declined – even if you’re able to easily repay."
I don't have any outstanding debts, so I'm assuming this has flagged up through lack of debt and therefore lenders seeing little to no recent history of me being able to pay them off.  I am going to be applying for a mortgage in the next couple of months, so how can I improve this?   Is it possible to improve it in a short space of time?  Should I start using my credit card now and pay off the balance in full each month?  And would this help improve my amber rating?  If so, how much should I be looking to put on it & pay off each month, in order for it to make an impact?

Thanks in advance for any suggestions.Rose

Thrugelmir

Ignore what you are being told for the purposes of obtaining a mortgage. There's no need to use a credit card if you have no need. That's just a perpertual myth. 

[Deleted User]

Ignore your amber rating and any other ratings provided by the CRAs. They don't have any relevance to lending decisions.

Using a credit card is a good way of showing you can be trusted with credit,  but it's going to have little impact on your mortgage application.  Spend whatever you want on the card and clear in full when you get the statement.

400ixl

For a mortgage application you will have to supply information which will give them a much fuller picture of your finances and disposable income than will be seen by the credit agencies.

No need to use any credit you do not need for that purpose.

[Deleted User]

Using a credit card builds up positive credit history if used every month and paid off in full but also gives you chargeback and section 75 protection

Roseiswell

Thanks for your responses it seems I don't need to worry too much about my credit card use at this time for the purposes of mortgage application - but it might be useful longer term to build credit and have the extra protection when buying.