Curve and mortgage applications

[sturgeon]

I’m wondering what a mortgage lender will think if they see I’m maxing out a curve card to front £10k spend monthly via my Barclaycard. I’d be using it to top up my savings monthly so it’s not effectively ‘spend’ but looks like I’m living beyond my means. Anyone used the card like this for personal use and had issues with a mortgage?

[Ash]

Have you tracked and checked your credit score? Any changes?

Is’nt curve charging you 1.5% fee for using it to top up a savings accounts, NS&I I assume…i gather as a result of the Creation fiasco NS&I and/or curve closed that free loophole.

[Rui N.]

I’ve never seen anything related to Curve on my credit report. I imagine that if you make use of their credit offering it will show there, but can’t see why anything related to Curve (the card) itself will show there.
But the spending from your credit cards will show there. But that’s easy to solve. Just need to make sure that any high balances are cleared before the date they report to the credit bureaus.

Ash: there’s £10k fee-free fronted per month on Curve Metal.

[jj]

@sturgeon, I’m afraid that it’s impossible to answer your question, as the UK has several hundred mortgage providers and each of these has its own approach to risk management. Unlike the USA, we have no single credit score that is used by many lenders; most large lenders will have their own in-house scores, and just one of the credit bureau, Equifax, has multiple scores that may be used by smaller providers. These scores do not move in tandem; it’s common for a person to rank well on MGILF04 but poorly on EIILF91 or RNILF01, for example.

Curve usage probably won’t hurt your application, but it might. Using a credit card for cash-like transactions (which Fronted does) could hurt some newer scores, for example.

Large month-end drawings against credit cards compared with either the credit limit or your salary would also reflect poorly on many credit scores. For example, my Experian score plummeted a while back when I paid about £25K on my Virgin Atlantic card as part payment for a car. I cleared the balance in full when the statement landed, but the presence of a large balance on one measurement date affected my credit score for about 6 months.

[Nath4n]

Good afternoon,

This is actually a niche but pertinent question that I spent a fair bit of time researching but was unable to easily get a clear answer to. To summarise briefly, credit cards report both monthly statement balance but also all payment amounts made on the account. If using Curve against a credit card, especially leading up to any financial scrutiny you’ll undoubtedly be paying down the balance PRIOR to the data being reported (i.e. usually shortly after statement date). If you ‘pay off’ the fronted payments rapidly afterwards your CC statement amounts will show just your ‘normal’ spending amount, which is used by banks / mortgage providers to calculate your ‘credit utilization’ – publicly acknowledged as the core data point used by banks to calculate your average short-term debt, and therefore the affordability of new credit.

The potential problem however is that the credit card will also be reporting your ‘payments’ each month which some CRA’s even broadly interpret as ‘spending’. You can see this data by diving into the credit card on your CRA data and looking month by month.

With a mortgage application in progress, I took a cautious approach to risk and decided to cease any curve ‘fronted’ spending against credit cards for the months leading up to and covering the application period. Whilst the risk may be low, I was not able to get clear information on exactly how banks use this data during mortgage applications (understandable as they all have their own individual internal procedures), and it’s a not too radical of an assumption to think that seeing £10k+ ‘payments’ every month on a credit card may raise some flags, whether these are automated or manual.

Hope that helps.

[sturgeon]

Thanks all for some very insightful responses. I hadn’t even contemplated credit reports and the large balances. I was primarily concerned with lenders looking at my bank statements and wondering how I’m affording a £10k monthly Barclaycard spend which would appear beyond my means. This coupled with the balances showing on a credit report (even if I paid the balance immediately) is also a concern. Basically I’ll hold off as I anticipate purchasing a new home and remortgaging this year, and will hope this is even an avenue still available once that’s all sorted.

[JDB]

sturgeon wrote:

Thanks all for some very insightful responses. I hadn’t even contemplated credit reports and the large balances. I was primarily concerned with lenders looking at my bank statements and wondering how I’m affording a £10k monthly Barclaycard spend which would appear beyond my means. This coupled with the balances showing on a credit report (even if I paid the balance immediately) is also a concern. Basically I’ll hold off as I anticipate purchasing a new home and remortgaging this year, and will hope this is even an avenue still available once that’s all sorted.

That seems sensible as, for a mortgage application, the credit report is an important but rather small part of the detailed automated and human analysis of your finances that will be undertaken and anything that raises questions is unhelpful.

[SamG]

I agree with this, especially if it’s a higher LTV loan or you’re maxing out your salary multiples, keep your finances very simple over the 3-4 months running up to the application and it’ll make life easier for yourself!

That said I have applied for quite a few mortgages over the last couple of years (personal, BTL, Ltd co. Expat) and tend to find they’re mainly looking at/questioning two things- 1) regular commitments and 2) balances carried forward. No one has shown any interest in my monthly expenditure or what cards/limits I have

[Wally1976]

sturgeon wrote:

I was primarily concerned with lenders looking at my bank statements and wondering how I’m affording a £10k monthly Barclaycard spend which would appear beyond my means.

I use an alternative current account to my main one for these purposes. One that also happens to give me a free magazine subscription or cinema tickets 😁

[JDB]

Wally1976 wrote:

sturgeon wrote:

I was primarily concerned with lenders looking at my bank statements and wondering how I’m affording a £10k monthly Barclaycard spend which would appear beyond my means.

I use an alternative current account to my main one for these purposes. One that also happens to give me a free magazine subscription or cinema tickets 😁

You should of course be disclosing this ‘other’ account which a competent mortgage company will
find anyway. In the way you describe it, the payments to your credit card would be easily visible from the account you are attempting to hide. I sincerely hope nobody follows your advice of being underhand about this as the cover up attempt can have serious consequences. If you need to deceive to obtain a mortgage, well…

[Harrier25]

This is very bad advice too because if you submit bank statements that don’t show your monthly household expenditure, the lender will request the statements from the account where these payments are made from anyway.

[Andrew.]

Harrier25 wrote:

This is very bad advice too because if you submit bank statements that don’t show your monthly household expenditure, the lender will request the statements from the account where these payments are made from anyway.

It’s not statements anymore, often it’s a full Open Banking data trough (for both mortgages and home rentals). Be prepared 5 years in advance for managing what’s being presented in the Metadata for what’s going through the current account, that you are planning on using to support your home loan application.

Maybe time to start taking the cash into Ladbrokes for your £10 flutter on the Boat Race or the family’s annual bets on the Grand National? Those parking fines and speeding tickets don’t look good either.

There isn’t much Metadata (for now) when you pay by cheque…

[Andrew.]

JDB wrote:

Wally1976 wrote:

sturgeon wrote:

I was primarily concerned with lenders looking at my bank statements and wondering how I’m affording a £10k monthly Barclaycard spend which would appear beyond my means.

I use an alternative current account to my main one for these purposes. One that also happens to give me a free magazine subscription or cinema tickets 😁

You should of course be disclosing this ‘other’ account which a competent mortgage company will
find anyway. In the way you describe it, the payments to your credit card would be easily visible from the account you are attempting to hide. I sincerely hope nobody follows your advice of being underhand about this as the cover up attempt can have serious consequences. If you need to deceive to obtain a mortgage, well…

Not exactly true. Four of my current accounts, including my every day current account, and several of my credit cards don’t appear on any Credit Agency report.

One of the benefits of them originally being “staff accounts”. My staff home loan also didn’t appear on any credit report.

[JDB]

@Andrew. I think you have missed the key points here: a) the failure to disclose everything is an issue in itself and b) you definitely don’t need data from a credit reference agency to discover hidden bank/card accounts. A few years ago I helped someone analyse the finances of about a dozen people many of whom obviously thought they were really clever withholding informing they are required by law to provide. One can spot the missing data and undisclosed accounts in minutes with account numbers and often very slightly different account titles. The reason for much of the hiding was to keep things from a partner, something that frequently leads to breakups.

You have mentioned these off grid accounts before but again, and as per above posters, what is so smart about not being honest and declaring what you are required to declare, unless of course you have something to hide?

[DarrenS]

SamG wrote:

I agree with this, especially if it’s a higher LTV loan or you’re maxing out your salary multiples, keep your finances very simple over the 3-4 months running up to the application and it’ll make life easier for yourself!

That said I have applied for quite a few mortgages over the last couple of years (personal, BTL, Ltd co. Expat) and tend to find they’re mainly looking at/questioning two things- 1) regular commitments and 2) balances carried forward. No one has shown any interest in my monthly expenditure or what cards/limits I have

My experience was similar last year when I guaranteed my son’s mortgage. They seemed to be only interested that I paid off my cards in full, one of which was consistently at 80+% of it’s limit.

[Andrew.]

JDB wrote:

@Andrew. I think you have missed the key points here: a) the failure to disclose everything is an issue in itself and b) you definitely don’t need data from a credit reference agency to discover hidden bank/card accounts. A few years ago I helped someone analyse the finances of about a dozen people many of whom obviously thought they were really clever withholding informing they are required by law to provide. One can spot the missing data and undisclosed accounts in minutes with account numbers and often very slightly different account titles. The reason for much of the hiding was to keep things from a partner, something that frequently leads to breakups.

You have mentioned these off grid accounts before but again, and as per above posters, what is so smart about not being honest and declaring what you are required to declare, unless of course you have something to hide?

I too have spent a great deal of time undertaking account and transaction investigation, I used to rather enjoy it. As you say, most people don’t try very hard.

Those accounts aren’t off-grid. They are with UK high street banks, and all with my full name at my home address. It was simply company policy not to share staff data with credit agencies. There are probably hundreds of thousands of accounts like mine. We were trusted! When we took out a staff home loan, the company didn’t bother with a mortgage.

[jj]

@Andrew, amongst other things, I set mortgage lending policies and credit criteria for a living. @JDB is correct; you are not.

[Nath4n]

jj wrote:

@Andrew, amongst other things, I set mortgage lending policies and credit criteria for a living. @JDB is correct; you are not.

jj, just out of interest – and feel free to declare that this is privileged information, but was I correct in my degree of caution towards manufactured CC spending leading up to mortgage application scrutiny? Even if this spending is immediately ‘paid off’ prior to any statement generation, whilst I fully suspect that the risk may be very low, as full data on these CC ‘payments’ is available to the CRA’s, I suspected it could play a role in mortgage lending scrutiny – if perhaps only at a manual review or audit stage.

Bottom line is, however miniscule, I wasn’t willing to take the risk that a house purchase could be jeapordised by (relatively) trivial points collecting.

[Andrew.]

jj wrote:

@Andrew, amongst other things, I set mortgage lending policies and credit criteria for a living. @JDB is correct; you are not.

So what exactly are you claiming I’m lying about?

[JDB]

@Andrew. I don’t think that anyone was suggesting you were lying, merely that you were incorrect that the accounts to which you refer that apparently don’t appear on your credit report are not invisible even if not on that report. They would be found very quickly, but more importantly nobody sensible should operate on the basis than can try to conceal any account.

[jj]

@Andrew, I said that you were incorrect; I did not say that you were lying.

The first issue is that deliberately withholding information on a mortgage application is fraud. If the lender reasonably believed concealment to be deliberate, you would have a fraud marker placed against your credit file that would make any future application for credit very difficult. Remember that mobile phone and monthly household insurance contracts would be caught up.in this.

The second issue is that, while a bank account may not appear on one credit file, itay well appear on a file from another credit bureau. Banks are rapidly moving to report current account data, so an account that is not currently reported to the bureaux may soon be reported, including retrospective data. And most mortgage lenders use a mixture of humans and algorithms to analyse bank statements. Transfers of any materiality to a hidden bank account would ordinarily trigger an investigation l, as it could indicate hidden committed expenditure or problem behaviour such as online gambling. Failure to investigate could therefore lead to censure by the regulator.

For these reasons, recommending that HfP readers should use hidden accounts to conceal manufactured spend is incredibly bad advice.

[jj]

@Nath4n, the full answer is complex. The simple answer is that, as you say, the risk is small but it cannot be ruled out. Having said that, most mortgage applicants have a choice of lenders, and I would be very surprised if all available lenders’ models took account of turnover rather than outstanding balances.

[duggie1982]

@sturgeon – what savings account do u top up? (if tried and tested) If you dont want to share on here then my email is my username @hotmail.com

All for educational purposes only of course

[mikmikmik9]

I shouldn’t worry too much about this. I have 999/999 Experian score and use 10k fronted on curve card monthly to generate Cashback. No problems.

Also if you have a current account / credit card opened prior to 1/1/2000 not permitted to report to cra. Little known fact.

[SteveJ]

mikmikmik9 wrote:

I shouldn’t worry too much about this. I have 999/999 Experian score and use 10k fronted on curve card monthly to generate Cashback. No problems.

Also if you have a current account / credit card opened prior to 1/1/2000 not permitted to report to cra. Little known fact.

An Experian (or any other) score is entirely irrelevant to a mortgage application. The lender will pass their own judgement.