Is my credit rating terrible?

onrail

Hi all,

Just a quick question, as I am beginning to get worried!

I am hoping to apply for a mortgage in the next couple of years and will therefore need to have a decent credit rating to be given funding. My current situation is that I'm youngish and have a permanent, low-moderately paid job which salary varies quite a bit from month to month depending to bonuses etc. My savings account currently holds about 60% of my annual salary.

So here's the bad news:

• My savings account is instant access, and I have often withdrawn from it to make one off payments like car insurance or rent deposits.
  
• I have a student credit card which I never 'upgraded'. I use this very occasionally (for small purchases from Amazon and the like) and always pay in full and on time apart from one occasion (for 12euro!) when I simply forgot - after which I was issues an arrears letter and the works!
  
• I have occasionally used online betting sites - spent in the region of 100 euro in the last year. I know that this is a very small amount in the scheme of things, but not so sure if the banks would take the same view?

Anyway, are these factors likely to really affect my chances of getting a mortgage? And if so, is there any way that I can fix the damage? Get a car loan first maybe?

NIMAN

onrail wrote: »

Hi all,

Just a quick question, as I am beginning to get worried!

I am hoping to apply for a mortgage in the next couple of years and will therefore need to have a decent credit rating to be given funding. My current situation is that I'm youngish and have a permanent, low-moderately paid job which salary varies quite a bit from month to month depending to bonuses etc. My savings account currently holds about 60% of my annual salary.

So here's the bad news:

• My savings account is instant access, and I have often withdrawn from it to make one off payments like car insurance or rent deposits.
  
• I have a student credit card which I never 'upgraded'. I use this very occasionally (for small purchases from Amazon and the like) and always pay in full and on time apart from one occasion (for 12euro!) when I simply forgot - after which I was issues an arrears letter and the works!
  
• I have occasionally used online betting sites - spent in the region of 100 euro in the last year. I know that this is a very small amount in the scheme of things, but not so sure if the banks would take the same view?

Anyway, are these factors likely to really affect my chances of getting a mortgage? And if so, is there any way that I can fix the damage? Get a car loan first maybe?

Don't want to sound negative, but this line would say to me that you probably shouldn't be looking for a mortgage at this time. They may reject you anyway, as their criteria for giving out mortgages are very strict.

onrail

NIMAN wrote: »

Don't want to sound negative, but this line would say to me that you probably shouldn't be looking for a mortgage at this time. They may reject you anyway, as their criteria for giving out mortgages are very strict.

May have phrased this incorrectly - My base/guaranteed salary is good for a graduate (slightly above average) but jumps to being excellent maybe 4-5 months of the year due to overtime and performance bonus. Still a tall order due to the other issues?

NIMAN

Your other issues?

Well I see no harm in paying car insurance and rent etc from your current account, we all have outgoings like that.

Basically you will have to have at least 10% of the value of the house saved, show you are in permanent work with decent income, are a good saver and have no black marks against your credit rating. If you fulfill these criteria then you may have a decent chance of getting a mortgage, but who knows what the bank will consider when deciding if you are a risk or not?

I would be more concerned about putting a mortgage around your neck at a young age, think very carefully before signing on the dotted line.

coylemj

OP, on the three issues you mentioned....

1. Savings account: nobody cares what you do with the money in that type of account. It has no effect on your credit rating for other financial institutions but your own bank will look favourably on the fact that you have accumulated the level of savings that you have in that account.
2. Credit Card: If you pay off the full amount each month, that is a positive. The fact that you don't spend much on the card is also a positive, illustrates financial discipline. One slipup shouldn't affect your credit rating, it happens everyone.
3. Gambling: The jury is out on this one but if your outlay is of the order of €100 p.a. I'd say that when you want to place a bet, you should withdraw cash and go into a bookie shop.

I think you have an overly pessimistic view of your credit worthiness. You can ask the Irish Credit Bureau for a statement of your record, I believe it costs only a few Euros.

homer911

I dont see any red flags - the main things would be the level of deposit you can bring and your ability to repay - this would be tested under a stressed scenario - say current interest rates + 2-3%

killers1

There's a difference between having a poor credit rating and being a good candidate for mortgage approval and I think you are confusing the two. In terms of your Credit Rating, so long as you have never missed any loan repayments or credit card payments your report will be fine. You can purchase a copy for €6 on www.icb.ie. In terms of being a good candidate for mortgage approval, seeing as you are not planning on purchasing for a year or longer you have plenty of time to operate your finances in a way that will ensure approval when the time comes. So long as your salary qualifies you to borrow the amount you need you then need to convince the bank that you can afford the stressed monthly repayment of the proposed mortgage consistently over a period of time, with 6 months generally the minimum. The best thing you can do to show repayment capacity is to pay your rent directly from your a/c each month and to try to save a consistent figure monthly and refrain from dipping into those savings. If your combined rent & savings comfortably exceed the stressed mortgage repayment for a consistent period of time you'll have no difficulty obtaining approval. Main thing also is to keep your current a/c in order, no unauthorised overdraft, referral fees, unpaid items & no online bookmakers transactions.

halkar

onrail wrote: »

....
I am hoping to apply for a mortgage in the next couple of years and
....

Save as much as you can borrow as little as you can. You will be fine.

Liam D Ferguson

Have a look at these tips for preparing for a mortgage application.

I wouldn't take out a loan just to improve your credit rating. I would, however, do as coylemj suggests above and place future bets in cash.