Confused about credit card usage before mortgage applications- First Time Buyer

Summer69

Hi all,

I am a first time buyer looking to buy early/mid next year. I have just been looking through my account on here and am confused about conflicting information I am seeing on my reports regarding credit card usage.

i currently have 3 credit cards with a credit limit of around £8k on each. My current balance across all cards is circa £100.

I use my credit cards for purchases and then either transfer the amount straight away or at the end of the month so my cards are generally paid of in full (or occasionally have a very small amount remaining for the following month)

On one part of my reports it says this is classed as Excellent and is a good thing as it shows I manage debt well and I make payments on time. But then elsewhere it states that this is only classed as Fair as I am using less than 1% of my available debt and doesn’t show I can manage credit and says I should use a credit card for payments and then pay it off in full at the end of the month. 

Then in another section it says I am usually nearly half of the credit that is available to me and I should be using less than 25%. The information regarding the amount of credit I am using is correct on my account.

I am confused as to the conflicting information and what I am meant to be doing with my credit cards?! Should I be using them more? Not paying them off so fast? 

I shouldn’t have anything on my credit card when I apply for a mortgage should I? I thought they took that into account when lending to you?

ACG

Dont read into what the credit agencies are telling you. 
Every lender is different. Some lenders will see you have £24k available and it will be a bit concerning, other lenders will see you are using £100 of £24k and think you are keeping well within your limits. 

Do what is right for you. Put all the other stuff and the fake imaginary score out of your head. 

No19v87

Credit agencies are trying to sell you additional products to earn their commission. 

Don’t look at their score, their rating or their advice..

lfc321

You are massively over-thinking this.
Just before a mortgage application wouldn't be a good time to apply for lots of new credit cards or build up massive balances, but your current credit card usage shouldn't cause any issues at all. Keep using your credit cards normally and paying them off each month if possible.

DullGreyGuy

Summer69 said:

I use my credit cards for purchases and then either transfer the amount straight away or at the end of the month so my cards are generally paid of in full (or occasionally have a very small amount remaining for the following month)

Put your spending on the card, wait for the statement, pay it off in full. Rinse and repeat. 

No need to pay things off as soon as you've bought it, no excuse for not paying the balance in full.

Summer69 said:
I shouldn’t have anything on my credit card when I apply for a mortgage should I? I thought they took that into account when lending to you?

They will look simply at your history, the CRA themselves will have no say or comments on the matter.

They will consider two things beyond just if you are a good payer or not:

1) Given the amount of debt you currently have can you afford it and the proposed mortgage?

2) Given the amount of available credit you have and your normal utilisation could you afford the mortgage if you had a few bad months and/or went a bit wild. 


I used my AmEx for every spending I can and, when travelling for work is a thing it all goes on there too. When we were applying for our mortgage it unfortunately coincided with several short notice business trips so the card balance was circa £15k. The lender said they were a bit concerned about, I pointed out its a chargecard so has to be paid off in full each month, they asked if I could pay it off early so did, sent a screenshot with the payment and no nil balance and got the approval 2 days later. In the end had to book another flight before completion so the balance went back up to circa £4k but they didnt say anything and it was paid off 21 days after the statement as normal. 

amnblog

1. Regular use and full payment of a credit card is an easy way for a Lender to assume you are a good payer.
2. Anyone who can afford it and does not repay their card account monthly in full is plain daft.
3. £5,000 balance on credit card on mortgage application can dent mortgage lending potential by some £8,000
4. Anyone who uses their credit card sensibly will not need to worry about how their card account affect their mortgage application.

Summer69

Thanks for all the comments. I was merely going by what it was telling me on this app tbh!

Thanks, panic over