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  • FIRST POST
    • FlickyK
    • By FlickyK 5th Jul 18, 8:40 PM
    • 8Posts
    • 3Thanks
    FlickyK
    will getting a credit card help my mortgage application?
    • #1
    • 5th Jul 18, 8:40 PM
    will getting a credit card help my mortgage application? 5th Jul 18 at 8:40 PM
    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!
Page 1
    • worried jim
    • By worried jim 5th Jul 18, 8:42 PM
    • 9,313 Posts
    • 14,360 Thanks
    worried jim
    • #2
    • 5th Jul 18, 8:42 PM
    • #2
    • 5th Jul 18, 8:42 PM
    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.
    "Only two things are infinite-the universe and human stupidity, and I'm not so sure about the universe"
    Albert Einstein
    • FlickyK
    • By FlickyK 5th Jul 18, 8:45 PM
    • 8 Posts
    • 3 Thanks
    FlickyK
    • #3
    • 5th Jul 18, 8:45 PM
    • #3
    • 5th Jul 18, 8:45 PM
    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
    • By Thrugelmir 5th Jul 18, 8:46 PM
    • 59,252 Posts
    • 52,622 Thanks
    Thrugelmir
    • #4
    • 5th Jul 18, 8:46 PM
    • #4
    • 5th Jul 18, 8:46 PM
    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+.
    Originally posted by FlickyK
    Will recover in time. Sudden changes cause scores to drop. The CRA has no idea why the account has been closed. Therefore plays safe.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • Carrot007
    • By Carrot007 5th Jul 18, 8:54 PM
    • 1,384 Posts
    • 1,150 Thanks
    Carrot007
    • #5
    • 5th Jul 18, 8:54 PM
    • #5
    • 5th Jul 18, 8:54 PM
    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
    • By worried jim 6th Jul 18, 7:15 AM
    • 9,313 Posts
    • 14,360 Thanks
    worried jim
    • #6
    • 6th Jul 18, 7:15 AM
    • #6
    • 6th Jul 18, 7:15 AM
    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
    Originally posted by FlickyK
    Exactly this.
    "Only two things are infinite-the universe and human stupidity, and I'm not so sure about the universe"
    Albert Einstein
    • sal_III
    • By sal_III 6th Jul 18, 9:20 AM
    • 328 Posts
    • 305 Thanks
    sal_III
    • #7
    • 6th Jul 18, 9:20 AM
    • #7
    • 6th Jul 18, 9:20 AM
    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.
    Originally posted by Carrot007
    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
    • By enthusiasticsaver 6th Jul 18, 12:16 PM
    • 6,699 Posts
    • 14,241 Thanks
    enthusiasticsaver
    • #8
    • 6th Jul 18, 12:16 PM
    • #8
    • 6th Jul 18, 12:16 PM
    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.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • FlickyK
    • By FlickyK 6th Jul 18, 2:13 PM
    • 8 Posts
    • 3 Thanks
    FlickyK
    • #9
    • 6th Jul 18, 2:13 PM
    • #9
    • 6th Jul 18, 2:13 PM
    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
    • By foxy-stoat 6th Jul 18, 2:17 PM
    • 2,205 Posts
    • 1,195 Thanks
    foxy-stoat
    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.
    Originally posted by FlickyK
    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
    • By takman 6th Jul 18, 3:02 PM
    • 3,493 Posts
    • 3,131 Thanks
    takman
    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.
    Originally posted by FlickyK
    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.
    • FlickyK
    • By FlickyK 6th Jul 18, 3:25 PM
    • 8 Posts
    • 3 Thanks
    FlickyK
    So just so I can be absolutely clear, on balance, better to get a credit card now, as long as that's the only thing on my credit file than to have nothing?
    • zx81
    • By zx81 6th Jul 18, 3:28 PM
    • 17,790 Posts
    • 18,900 Thanks
    zx81
    Definitely better than nothing. But no reason why that should be the only thing.

    A mature, low risk credit file would normally show a credit card or four, phone contracts, utilities etc.

    All safe, solid things that show you're not reliant on credit but can manage it on an everyday basis and aren't afraid of it.

    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.
    Originally posted by FlickyK
    They're not mutually exclusive. It's just that the first option makes you wealthier and saves you more money.
    Last edited by zx81; 06-07-2018 at 3:30 PM.
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