Always in overdraft

JML020986

Hi 

im looking for advice on two things, how much being in your overdraft nearly all the time affects credit score/mortgage application and also can a bank take an overdraft off oyu with no warning ?

in a nutshell my savings are 4 times more than my overdraft but currently to one side to buy a house, if i was to put enough in just to buffer the overdraft and then transfer it back into my savings when im ready to buy, would this be a benificial move ? my worry is once in out of it the bank take away the overdraft facility and my money is gone to paying that back ? 

Hope this makes sense 

Thanks 

MorningcoffeeIV

It doesn't matter how it affects your credit score, as that's not a thing.

But living in your OD or being in it every month tells lenders you're living beyond your means so can't afford to take on more debt.

And yes, a bank can withdraw an OD at any time, so get out of it right now.

JML020986

so if for argument sake my overdraft was 1K, i transferred 1K from savings to make sure i wasnt going into my overdraft monthly, can they just wipe the OD off and take my 1K or would they have to give me prior notice of OD reduction/removal ?

MorningcoffeeIV

If you're not in your OD, there's no money they could take.  Your balance would be positive - or zero at worst.

You only owe them money if you're in your OD. If you have money in savings with the same account, they could in theory take that to off set the debt.

The OD facility can be removed at any time, which is why you need to get out of it.

penners324

Are you paying interest on that overdraft? Utter madness to keep doing so if you are and have savings yo cover it.

elsien

I don’t understand why you want to stay in your overdraft. If you have 4K in a savings account and 1k of debt, then in reality you only have 3K for any useful purpose. The rest is just playing with numbers. 

You look less affordable rather than more to a lender if you are permanently into an overdraft. Lenders don’t look at credit scores. They look at how are you are managing your money and whether they want to risk lending any more to you. That’s your credit history not some score made up by shifting things around the place.

Casskale

JML020986 said:

so if for argument sake my overdraft was 1K, i transferred 1K from savings to make sure i wasnt going into my overdraft monthly, can they just wipe the OD off and take my 1K or would they have to give me prior notice of OD reduction/removal ?

You need to get out of the mindset that your credit lines are your money. They aren't, and can be withdrawn at any time. In fact overdrafts are repayable on demand so they can not only remove the limit but demand immediate repayment.

Maybe, just maybe, if the OD was interest free, I could understand the stoozing aspect. But it's probably a fools game to be making maybe 30 quid a year on this if you're looking to buy a house.  Perhaps via a broker you could convince a lender, but would it be worth it for less than a night out?

And if you're paying 39.9% APR for it I think anyone looking at an application from you would immediately refuse a mortgage. It shows an extreme naivety in financial matters.