To apply for a credit card now? (Mortgage rejected)

[Meanwhilesomeday]

We are first time buyers, just starting to look at new houses. We have been rejected for a mortgage in principle by nationwide due to 'credit report'.

I have no defaults on my report, so think it could be a lack of credit history. DH has a default from 5yrs ago of £15 (£6.50 X2 months) for a phone contact where the direct debit continued trying to come out of his account after he thought the contract had been terminated, but has no other issues on file and sorted this many years ago.
Because of this we were wondering if we should apply for a credit card and spend sensibly on it for 3 months and then apply for a mortgage?

Is this a bad idea, will applying for a credit card make it harder to get a mortgage after 3 months? Or is this enough time to build up credit history?

It's very frustrating, as the mortgage we have applied for we can comfortably pay with just one salary.

Thanks.

From what I heard from a friend applying through covid, it's more likely the default. They had 1, not even his fault(!) so managed to have it taken off. That's what he said.
Can they provide you with some more details than just "credit report"? Thhey should be able to

Also, there are providers who are more lenient than others. I think accord mortgages are (I am happy with them)

I think it’s actually the fact you’ve never had credit so they don’t know any credit history so yes-take out a credit card. We actually buy everything on our credit card and leave all our wages in the bank each month as we have a mortgage connected to our account (more money in bank/less mortgage lent) and we then pay off the CC at the end of each month in full.

Martin Lewis and Exprian have good blogs etc. On how to build your credit score up.

@MrsElijahMikaelson1

I think it’s actually the fact you’ve never had credit so they don’t know any credit history so yes-take out a credit card. We actually buy everything on our credit card and leave all our wages in the bank each month as we have a mortgage connected to our account (more money in bank/less mortgage lent) and we then pay off the CC at the end of each month in full.

I do the same. The cc also has wxtra protection and whem there is a dodgy payment it's sorted out super quick.

Hi OP, we're just in the process of buying our first home and had a similar experience with Nationwide - apparently they're the best, which is why our broker tried them first, but they're also notoriously strict. We were rejected because the way that I'm paid means that my salary looks not-quite-as-secure as they'd like, even though DP and I are both in education/key workers, etc. We had more than enough funds coming in each month to pay a mortgage, but still got rejected, then Nationwide started to say that there was something up with one of our credit histories too, but wouldn't say whose or what the issue was

A few weeks later, we got a mortgage with TSB. It was really straightforward! Are you with a broker? Let them know that you'd like to look at other lenders/products (although, if you have one, they're probably already doing this anyway). If you're going directly to banks, I'd recommend speaking to a few others.

It’l be the default from 5 years ago. Nationwide are pretty strict. The same thing happened to me and we went with NatWest and had no issues. Try a different bank, or a mortgage broker who will go through everything and pick the right bank for you.

Talk to a mortgage broker. They only a few hundred quid, and they'll help you work everything out.

Nationwide customer here. Never had a credit card, neither has my husband. We did however; have 5+ years of constant direct debits and clear evidence of ability to pay etc.

Go see a mortgage broker. Some are free (get commission from mortgage provider), others charge, but it's worth it - you only have to give all your details once and then they only look at mortgages you are likely to be approved for.

Thank you for your suggestions. I will hold off on a credit card until I have spoken to a broker. Hopefully this is just nationwide being very strict, and we will be approved for something else at a reasonable rate. So disappointing if it is that default, for the sake of £15!

Funny how nationwide is strict like this yet nearly costed me a mortgage by having an account on file which has never existed (system duplicate of our account apparently) which meant my lender wasn't happy...🙄

Yes, broker can eb absolute gold. Mine was great (I paid 300), found good mortgage and cashback covered her fees and part of the solicitor fees too.

I had to do this to get a credit score after living abroad for many years .... think I spent a whole 50p and then paid it off right away and walked away with a brilliant score .

Is the default just 5 years ago or almost 6? It might be worth waiting for it to disappear before making any further moves.

Money saving expert have a credit score checker, it’s free and will tell you why lenders may or may not lend to you. It doesn’t affect your credit score by using the tool so I’d look at that and use a mortgage broker.

I would say it is more likely the default than lack of credit history. It should be gone in a year or two. I think you will have a very hard time getting any mortgage with a default, no matter the context, unfortunately.

I don't think you will. Have a hard time at all and you need to speak to two or three mortgage brokers.

I have to say I agree with pp's saying it is likely the default. We got a mortgage this year and the broker said most lenders took all 95% and 90% mortgages off the market for half of 2020 and were being incredibly strict on defaults/issues with any mortgages they were actually approving. It is a very hard time to secure a mortgage.