Reader Question:
Hi Damien
I'm trying to get a mortgage but concerned that my poor rating means I won't be able to. I've cleared all my debt, have shut down one credit card - and want to use the other one for controlled spending; I've set up a direct debit for paying the full balance every month - and am about to save hard (debt was only paid off this month, but from this pay day I will be saving lots). I haven't got any CCJs but I have on occasion missed a bill payment. In my student days I moved around a lot, too. I've done all the 'standard' things like making sure I'm on the electoral roll. Is there any point in me applying? I don't want to damage my future chances but am so keen to get on the ladder. I have been given a deposit.
I'm sure you can't offer personal advice, but a steer in the right direction would be so helpful.
Many thanks
My response:
Ultimately when is the right time to apply is down to you to decide i.e. when you have a sufficient deposit, find the house you want etc.
I can see where you are coming from regarding applying for a mortgage now. Your best bet is to speak to a mortgage adviser who will assess your circumstances and will be able to guide you on the most suitable mortgage and the likely rate you will end up paying.
But remember that enquiring with a lender what rate you are likely to get and applying for a mortgage are two different things. If you ask a mortgage lender what rate you are likely to get they will check your credit report to provide a quote but the footprint this leaves behind won’t affect any credit scoring. Just make sure they can offer you this estimate without needing to undertake a credit-application search.
If, however, you apply for mortgage (i.e. effectively ask the lender whether they will lend to you - even just an agreement in principle) this will involve a credit-application search and therefore leave a credit-application footprint on your report, which can affect any credit scoring carried out by other lenders. So you obviously want to limit these.
I hope that helps
Damien
Money to the Masses
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