I am 25, have never had a credit card, and don’t think I ever will – but that didn’t stop me from getting a mortgage over a year ago.
Most of my friends and family have credit cards and boast about the great perks you can get – like early access to concert tickets or free flights – in a bid to get me to change my mind.
One friend said to me: “But what about when you want to get a mortgage, you will need a credit card then.”
When it comes to being approved for a mortgage, there is a common myth that you need a credit card for your lender to accept your application – because this is the way you have a strong credit score.
Now, while it is true that one may bolster your credit score, which may make lenders look at you more favourably, not having one doesn’t necessarily stop you getting a mortgage. My partner and I are a case in point – we both have never had them and were approved for our mortgage in 2024 to buy our first home.
We were able to borrow up to 95 per cent loan-to-value on a five-year fixed-rate mortgage with the Nationwide Helping Hands Mortgage – and the fact we didn’t have credit cards wasn’t an issue.
I have a credit score of 699 out of a 1,000, and although my Clear Score app tells me I could boost it by taking out a card, I don’t think I will.
It’s not that I am completely against credit cards, it’s more that I don’t trust myself to get one. I have heard countless stories in my role of people who have racked up thousands of pounds in debt because of them, and it’s easily done, so why would I tempt myself?
I already have a £250 interest-free overdraft and that is enough for me – clearly not having a credit card hasn’t hindered my ability to be able to take out other lines of credit. I was able to take out some of our furniture on interest-free credit, and again, not having a card prior didn’t seem to be a problem.
Gerard Boon, managing director of Boon Brokers, said it was indeed a myth that you need a credit card to get a mortgage: “Our broker team have mortgage approvals daily from candidates with no clear credit history. Lenders focus more on their ability to match an applicant to public records. For example, lenders may check that applicants are on the electoral roll or use open banking to review an applicant’s income and expenditure.
“Prior to new banking technology, lenders relied on an applicant’s credit report to assess their likelihood of missing payments. However, now, it’s become far less important as lenders have other means of assessing this from applicants.”
Allan Davis, owner of Finance 4 Homes, another UK mortgage advisory firm, said the idea that you still need a credit card comes partly from the general advice that using one responsibly – and paying it off in full each month – can build your credit file quickly.
He added: “That’s true, and its useful advice for some people. But it’s a shortcut, not a requirement. Plenty of people manage their finances perfectly well without one and are excellent mortgage candidates as a result.”
In my case, I had never missed a direct debit payment, never gone over my interest-free overdraft limit and hopefully doing those things alongside now paying my mortgage will allow me to maintain a healthy credit score.
Having a credit card is by no means a bad thing and people who can use them responsibly should continue to do so, but for me personally and the way that I am, I see it as a slippery slope of getting into debt easily.
Misconceptions around debt are common among first-time buyers, with data from Compare the Market suggesting one in 10 prospective first-time buyers believe they must never have had a credit card to secure a mortgage, while just over a fifth think being completely debt-free guarantees approval.
How can you improve your credit record?
According to Charlie Evans, personal financial expert at Compare The Market, mortgage lenders assess your repayment history on several factors: your credit utilisation – the proportion of available credit currently in use – how affordable the borrowing is for you, and evidence of managing different types of credit responsibility.
If you are a prospective first-time buyer, Evans says it is best to take proactive steps to understand and improve your credit before applying for a mortgage.
Things you might want to consider include making sure you are on the electoral register, checking your credit report so you can correct any errors or inaccuracies, avoiding applying for lots of credit all at once, and maintaining a consistent repayment history.
Leave a comment