will getting a credit card help my mortgage application?

I've done LOADS of googling on this but am
still unsure of the best thing to do!

My partner and I are saving hard and we hope to be in a position to start looking to buy a house/apply for our first mortgage in Dec 18/Jan 19.

Credit score wise I thought I was in a good position, plenty of savings etc. I used to have a credit card with quite a big limit but that
I literally never used any of the credit so I closed it about 4 months ago, but now my credit score has dropped, specifically since I closed the account. It's early 900s now but was 950+.

But now I don't know whether I should apply for a new credit card and use it a little bit and pay off etc or whether that will actually look bad on a mortgage application to have applied for one potentially within the previous six months?

So should I get one - will it help or ultimately harm my chances of getting accepted/a good deal? Advice seems really mixed and I definitely have friends who have gotten mortgages but have never had one.

Thanks for any advice!
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Comments

  • worried_jim
    worried_jim Posts: 11,631
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    Your score is a made up number that only you see. The mortgage provider is only interested in your credit history and the affordability of the product.
  • FlickyK
    FlickyK Posts: 23
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    Ah OK i never realised that! So I should stop worrying about the actual number and just make sure all my accounts are looking good!

    Thank you
  • Thrugelmir
    Thrugelmir Posts: 89,546
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    FlickyK wrote: »
    I literally never used any of the credit so I closed it about 4 months ago, but now my credit score has dropped, specifically since I closed the account. It's early 900s now but was 950+.

    Will recover in time. Sudden changes cause scores to drop. The CRA has no idea why the account has been closed. Therefore plays safe.
  • Carrot007
    Carrot007 Posts: 4,534
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    Furthermore no, on a mortgage they will just see a creditcard as debt you might run up and take it off your maximum lend. Or worse should it be run up.
  • worried_jim
    worried_jim Posts: 11,631
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    FlickyK wrote: »
    Ah OK i never realised that! So I should stop worrying about the actual number and just make sure all my accounts are looking good!

    Thank you

    Exactly this.
  • sal_III
    sal_III Posts: 1,953
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    Carrot007 wrote: »
    Furthermore no, on a mortgage they will just see a creditcard as debt you might run up and take it off your maximum lend. Or worse should it be run up.

    Your statement is a bit misleading. The lender will treat only CC balance as debt (which it is), not your CC limit. If the balance is 0 or you are clearing it monthly in full - it doesn't affect your mortgage application.
  • enthusiasticsaver
    enthusiasticsaver Posts: 15,445
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    I would not be applying for credit while you have a mortgage application going through. Forget the credit score it means nothing as any potential lender will be scoring using their own criteria and your credit history.

    Having said this I always think it is a good idea to have at least one credit card for the section 75 protection so if you do not intend applying for 6 months or more it could be worth doing. Why did you not just ask for the limit to be reduced on your old credit card. Using it monthly and paying it off in full shows good money management so that is certainly an option.
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  • FlickyK
    FlickyK Posts: 23
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    It's weird I don't understand why borrowing every month and paying off is seen as better money management than saving money every month by living pretty frugally and having decent savings.
  • foxy-stoat
    foxy-stoat Posts: 6,879
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    FlickyK wrote: »
    It's weird I don't understand why borrowing every month and paying off is seen as better money management than saving money every month by living pretty frugally and having decent savings.

    Because it shows credit history - your ability to make contracted payments on a credit agreement is a good thing in the eyes of future lenders.
  • takman
    takman Posts: 3,876
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    FlickyK wrote: »
    It's weird I don't understand why borrowing every month and paying off is seen as better money management than saving money every month by living pretty frugally and having decent savings.

    Paying off a credit card shows that you can control your spending to within set limits that you can afford to pay off each month. Compared to some people who would spend right up to the limit and pay a little off each month showing poorer money management (if there is no 0% interest deal).

    Also as mentioned you missing out on Section 75 protection on purchases over £100 by not having one.

    It's a shame you didn't post on here before closing your credit card account because you could have started using it to build up some good history. You can still do that now but it won't be as good because you will have a new account/credit search on your file within the last year when you come to apply for a mortgage. Although if this is the only new credit account/search it won't have too big an impact.
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