This is one of the most common themes mortgage advisors see.

Often applicants will have read online or spoke to a friend, who’ve advised them to take out credit such as a credit card, which will in turn boost their credit score.

What usually happens is the exact opposite.

When you take on a new debt, your credit score will take an initial hit as the credit reference agencies such as Experian and Equifax don’t know how you will manage the new debt.

Once you begin to make payments and credit agencies can see the debt is being well managed, your credit score will improve slowly over the next 3-6 months.

In addition, mortgage capacity/affordability i.e. the amount you can borrow based on your income and outgoings, may be reduced as a result of the added expense.

Therefore from a mortgage perspective, a new credit commitment can:

• Lower your maximum loan amount

• Trigger additional underwriting checks, especially if the debt if very new 

• Negatively impact your credit score/overall credit profile

Mortgage lenders want stability. A new financial commitment shortly before applying can signal increased risk, even if it seems manageable to you.

Best practice: Avoid taking out any new credit (including buy-now-pay-later, car finance, personal loans, or new credit cards) for at least 3-6 months before applying and during the house buying process, unless you’ve spoken to your adviser first.

Career progression is positive, but timing matters.

Most lenders ideally want to see that you’ve been in your current role for at least 1-6 months.
If you change jobs during the mortgage process, it can:

• Delay your application or completion

• Require additional documentation such as contracts or references

• Trigger a reassessment of affordability

For self-employed applicants, going from an employed to self-employed position or changing from a sole trader to a Ltd Company or vice versa, can have a massive impact on your mortgage application.

In these two scenarios, it could well result in your application being declined.

This doesn’t mean you can’t move jobs, it just means you should discuss it with your mortgage advisor before accepting an offer or changing your position prior to doing so.

It’s often the “small” missed payment that causes problems.

A £12 phone bill or a £25 credit card minimum payment might feel insignificant but once it’s reported to credit agencies as late or missed, it can play havoc on your mortgage application, especially if it’s recent.

Even a single missed payment in the last 6–12 months can:

• Reduce lender choice

• Result in a higher interest rate payable

• Result in higher product and advice fees

• Require further explanation

Lenders look for patterns of financial responsibility. Consistency is key.

Before applying:

• Check whether you have any missed payments, defaults or CCJ’s registered against you by obtaining a credit report

• If you are in dispute of a payment, don’t think “I’ll just not pay you then”, go through the correct complaints process with the provider instead.

• Ensure all commitments are paid on time

• You don’t have any returned direct debits or standing orders showing on your bank statements

Small blips can cause you huge and unnecessary stress when you come to apply, and will likely cost you more money in the long run.

This can be an area that applicants underestimate, and some lenders take this more seriously than others.

Lenders review 3 months of bank statements typically and underwriters assess spending behaviour as part of affordability and risk profiling.

Occasional, modest gambling transactions are not automatically a problem. 

We’re talking the odd football accumulator or explainable expense such as a trip to the races or the Grand National.

However, regular or high frequency transactions, in particular gambling expenses can:

• Raise affordability concerns

• Suggest financial risk taking

• Trigger additional questions

• Reduce available lender options. As above some take this more seriously than others.

The concern isn’t moral, it’s about risk. And whether the lender believes that the pattern of gambling expenditure poses a greater risk than what the lender has appetite for.

Other considerations that may increase the chance of the lender declining:

• Smaller deposit – for example of 5-10%  

• Deposit is predominantly or wholly made up of a gift

• A large or reasonable level of debt

If you’re planning to apply for a mortgage, reducing or stopping gambling transactions several months in advance would be ideal.

Overdrafts, buy now pay later (BNPL) and pay in installments are more common than ever. 

Most applicants will have some form of buy now pay later or interest free finance such as Klarna, and it is something Lenders are starting to clamp down on.

Lenders look at:

• How frequent they are used

• Whether you remain in your overdraft consistently or are regularly using BNPL agreements

• If you’re hitting or exceeding your limit each month

• And of course whether you are being late with any payments

Rare or occassional use isn’t usually an issue.

Being reliant on them though, however, may suggest your budget is already stretched which impacts affordability calculations and potentially the underwriters decision.

Even if your income is strong, consistent overdraft and BNPL use can:

• Reduce how much you can borrow

• Limit lender choice

• Raise red flags during underwriting

Improving your account conduct 3–6 months before applying by limiting or avoid use of overdrafts and BNPL agreements can significantly strengthen your application.