A friend of mine (American, permanent resident in the UK and not the brightest bulb on the Christmas tree) is getting a divorce. Even though she’s lived in the country for over 15 years, she tells me that one of the problems she’s having is establishing her credit record. From what I know:
she had a bank account with a Welsh bank. This account is now joint with her husband. The bank has told her she’ll be able to just take out her husband’s signature and “get back the account”. (This sounds very weird to me, in Spain you’d have to close the joint account and open a new one - is what she told me correct or did she misunderstand?)
She doesn’t currently have a credit card.
The house was paid mostly with her money but it’s under both their names. She plans to put it up for sale in February, then perhaps rent for a while before she decides what to do with the rest of her life.
She’s currently paying the installments on a computer: wouldn’t this count as a loan? Does this affect her rating positively or negatively?
Anyway… for our UK people, and please US people remember that credit rules are very different from country to country: how can one build credit there? What would make it easier for her to get a credit card? Are there any mortgage companies that give mortgages without owning a credit card?
She’s one of those women who let their marriage eat away at them, so on one hand she’s now doing what she wants for the first time in many years, but on the other I’d like to kick her husband into the North Sea for draining her dry and then exchanging her for a younger version (quite literally, the new chick is very much like my friend used to be 12 years ago). He’d been making way too many of their decisions, so she’s feeling very lost. All her financial information comes from people like “someone at the office who worked at a mortgage place for three months”, so any advice you guys give can’t be worse.
I don’t know whether the foreign national bit confuses the issue, but a few years ago when my Dad wanted a loan he was refused due to having no credit history. He had never had a loan, or a credit card, although he did have a mortgage. If the pattern follows, then the mortgage your friend has had may not be impacting much on her credit rating. The usual way quoted to build up a credit rating is to get a low limit credit card and use it (whilst paying off the full balance every month).
I would’ve thought the bank would require her husband’s permission to do this.
Not necessarily a problem. Has she had one in the past?
The fact that she has a mortgage would normally give a very strong credit rating, provided she has always kept up-to-date with her repayments. The fact that it’s held jointly is irrelevant.
Positively, provided she has always kept up with her repayments. People in debt who always pay back have the best credit ratings of all - far better than someone who’s never been in debt.
You by no means need a credit card to get a mortgage. Mortgage companies go into much more involved credit checking than loans or credit card companies, and will normally bend over backwards to find a way to lend you the money provided you earn the money you say you do and have never committed a cardinal credit sin such as having a house repossessed.
I guess I don’t understand the problem. Why does she think she has a bad credit rating? You build up a good credit rating by getting into ‘agreed’ debt and paying it back regularly. An existing mortgage history is a great way to start - and she has one of these.
There are a number of organisations that will show you your credit rating and explain how you can improve it. This link will show her where to go for advice:
If there’s joint liabilities, especially the mortgage, the husband’s credit record will affect hers. What his history is (and perhaps some of it is unknown to her) may be very relevant.