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  • FIRST POST
    • ledoof
    • By ledoof 19th Jul 19, 6:49 PM
    • 9Posts
    • 0Thanks
    ledoof
    Credit utilisation
    • #1
    • 19th Jul 19, 6:49 PM
    Credit utilisation 19th Jul 19 at 6:49 PM
    Hi

    I have read that below 30% is the ideal credit card utilisation before applying for a mortgage. I currently have 40 - 45% utilisation of my available credit and am hoping to apply for my first mortgage in the next 3 months.

    My credit card reports all show as good/fair, I have had the same full time job for 6 years and no missed or late payments on credit cards etc.

    I know ideally I would get my credit cards to below 30% but I won’t really be able to before I apply.
    So my question really is - has anyone applied for a mortgage with a credit card utilisation of 40% or higher and had any problems because of this ?

    Thanks in advance
Page 1
    • MovingForwards
    • By MovingForwards 19th Jul 19, 8:15 PM
    • 1,880 Posts
    • 2,178 Thanks
    MovingForwards
    • #2
    • 19th Jul 19, 8:15 PM
    • #2
    • 19th Jul 19, 8:15 PM
    A lot will be down to income.

    5k spends on 15k income won't go down well compared to 5k on 40k income.
    • Gary_Dexter
    • By Gary_Dexter 19th Jul 19, 9:40 PM
    • 5,798 Posts
    • 3,837 Thanks
    Gary_Dexter
    • #3
    • 19th Jul 19, 9:40 PM
    • #3
    • 19th Jul 19, 9:40 PM
    Utilisation is a myth.
    It’s for the CRA’s to improve your fictitious score or rating.
    • ledoof
    • By ledoof 20th Jul 19, 7:24 AM
    • 9 Posts
    • 0 Thanks
    ledoof
    • #4
    • 20th Jul 19, 7:24 AM
    • #4
    • 20th Jul 19, 7:24 AM
    Sorry, I don’t understand your message ? I have read many times on reputable guides to getting a mortgage that credit utilisation is taken into account by mortgage providers - do you have anything to back up what you are saying ?
    • Nebulous2
    • By Nebulous2 20th Jul 19, 8:48 AM
    • 2,374 Posts
    • 1,573 Thanks
    Nebulous2
    • #5
    • 20th Jul 19, 8:48 AM
    • #5
    • 20th Jul 19, 8:48 AM
    What is your credit balance and limit?

    I've posted repeatedly, I had £30k on credit cards, decided to get a mortgage, was told I needed to get it under £10k, which I did and my mortgage sailed through.

    Your level of debt in comparison with your income will matter much more than utilisation. That is a particular issue if you are pushing your limits for affordability. It could dramatically cut the amount of mortgage you are offered.
    • csgohan4
    • By csgohan4 20th Jul 19, 10:17 AM
    • 6,299 Posts
    • 4,215 Thanks
    csgohan4
    • #6
    • 20th Jul 19, 10:17 AM
    • #6
    • 20th Jul 19, 10:17 AM
    Sorry, I don’t understand your message ? I have read many times on reputable guides to getting a mortgage that credit utilisation is taken into account by mortgage providers - do you have anything to back up what you are saying ?
    Originally posted by ledoof
    Are these same guides saying your credit score matters for the mortgage application? If they are your getting your information from the wrong sources, above info is sound and what is reflected in previous posts from brokers as well
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"
    • Typhoon2000
    • By Typhoon2000 20th Jul 19, 1:13 PM
    • 986 Posts
    • 499 Thanks
    Typhoon2000
    • #7
    • 20th Jul 19, 1:13 PM
    • #7
    • 20th Jul 19, 1:13 PM
    It’s the amount of debt in relation to income that’s import. 90% utilisation on a £1200 credit limit is very different from £15k debt at 30% utilisation on the same income.
    • Somerset La La La
    • By Somerset La La La 20th Jul 19, 6:10 PM
    • 758 Posts
    • 268 Thanks
    Somerset La La La
    • #8
    • 20th Jul 19, 6:10 PM
    • #8
    • 20th Jul 19, 6:10 PM
    It's the total debt that would make the biggest impact.

    Personally, as an underwriter I hardly ever calculate the utilisation (unless it's clear someone's going to be very high, and I'm declining the case)

    The (lender) credit scoring in the background may take utilisation into account, it would vary by lender. CRAs are very misleading as others have said

    Anything below 50% is unlikely to cause an issue. The actual amount may for affordability purposes - make sure you are clear you are repaying it, if that is going to be the case
    Work in Underwriting (Mortgages) - posts are my opinion/experience etc, not official company policy/lending rules.

    Only the underwriter assigned to a case at full application stage can give a 100% definitive answer to queries
    • peterf83
    • By peterf83 21st Jul 19, 12:33 PM
    • 8 Posts
    • 1 Thanks
    peterf83
    • #9
    • 21st Jul 19, 12:33 PM
    • #9
    • 21st Jul 19, 12:33 PM
    It's the total debt that would make the biggest impact.

    Personally, as an underwriter I hardly ever calculate the utilisation (unless it's clear someone's going to be very high, and I'm declining the case)

    The (lender) credit scoring in the background may take utilisation into account, it would vary by lender. CRAs are very misleading as others have said

    Anything below 50% is unlikely to cause an issue. The actual amount may for affordability purposes - make sure you are clear you are repaying it, if that is going to be the case
    Originally posted by Somerset La La La
    Sorry for hijacking the thread but it's related. I'm in the process of selling my house to buy a bigger house. I have 50% utilisation but intend to pay my debts off from the proceeds of the house sell.

    How does this work in practice? I can't pay my debts off until I sell my house, but will the mortgage provider offer me a new mortgage to complete the sale of my own house based on me telling them that I will pay my debts off. It seems like a catch 22 and I'm not sure how it all plays out?
    • LawAbiding
    • By LawAbiding 21st Jul 19, 12:43 PM
    • 221 Posts
    • 114 Thanks
    LawAbiding
    Peterf83, exact position I am in, got about 13k worth of credit card debt and plan to use some of the equity rleease in the sale of my home to pay this off and other freinds/family loans and use the rest as deposit.
    MY utilization is 42% and my partners is 82%, the 13k is combined debt of ours.

    I explained this to our broker, fingers crossed, we expect to hear mortgage offer this coming week.

    Not much else you can do but to inform the lender.

    Although when you apply directly, it does ask about debt, you may want to check with lender do you have to tick yes to xx debt if it's going to be paid off before mortgage starts.

    Barclays say you tick No to xx debt if it's going to be paid off, this was confirmed with advisor at Barclays.
    • Somerset La La La
    • By Somerset La La La 27th Jul 19, 11:48 AM
    • 758 Posts
    • 268 Thanks
    Somerset La La La
    Sorry for delayed reply, not been on here for a while.

    The debts MAY get factored in at credit scoring stage. I believe some banks (Halifax being one) will reject at credit score if your unsecured debt is too high compared to income.

    Other lenders will be fine. It depends on the rest of your profile. If you tick it to be repaid and it's plausible from the equity then I wouldn't expect any issues (e.g. if you only have £20k equity but £30k debt marked to be repaid it will cause issues/questions).

    I've personally seen & approved cases with a LOT more than 50% - approved on the basis that client will repay debts and be in a better overall position afterwards.

    Of course there are going to be many I didn't see that credit scoring kicked out - be it for level of debt to income, level of utilisation, conduct or any combination of issues (which even we can't see much info on, for security reasons otherwise potentially staff/acquaintances could look to exploit it)

    If you're using a broker, they know which lenders don't like high levels of debt and which will be ok with it (as it's being repaid). Which lenders will take a contingency deduction from affordability (even though it's being repaid) and which won't etc. I wouldn't worry, speak to a broker and get them to do some DIPs to reassure you a bit
    Work in Underwriting (Mortgages) - posts are my opinion/experience etc, not official company policy/lending rules.

    Only the underwriter assigned to a case at full application stage can give a 100% definitive answer to queries
    • Bozzer89
    • By Bozzer89 27th Jul 19, 2:57 PM
    • 21 Posts
    • 1 Thanks
    Bozzer89
    Quick question somerset of it's ok?

    We've just applied for a mortgage with precise got a MIP for 176k with mine and my partner's earnings. We have credit cards and car finance totalling between 9k all pay back monthly on time etc total income is around 38k for us both. Would u reckon this would be a bad factor on our application ?
    • Bozzer89
    • By Bozzer89 27th Jul 19, 2:59 PM
    • 21 Posts
    • 1 Thanks
    Bozzer89
    Just to put the house we have gone for is only 140k with 20% HTB and 5% from us so only lending of 105k from precise.
    • csgohan4
    • By csgohan4 27th Jul 19, 3:40 PM
    • 6,299 Posts
    • 4,215 Thanks
    csgohan4
    Quick question somerset of it's ok?

    We've just applied for a mortgage with precise got a MIP for 176k with mine and my partner's earnings. We have credit cards and car finance totalling between 9k all pay back monthly on time etc total income is around 38k for us both. Would u reckon this would be a bad factor on our application ?
    Originally posted by Bozzer89
    Create your own thread instead of hijacking some one else as per forum etiquette
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"
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