Does Going Into Overdraft Affect My Credit Score?

illustration of Does Going Into Overdraft Affect My Credit Score?

Overdrafts are a useful safety net, but can be a really expensive way to borrow. Here’s what you need to know about overdrafts and credit scores - and how they affect mortgages.

Does going into overdraft affect my credit score?

Going into your overdraft won’t affect your credit score, as long as you’re still making your credit repayments. Your bank account and your credit report aren’t linked. 

Your credit score could be indirectly affected by your overdraft if you don’t have enough money to make your credit commitments and defaulted on your loan, credit card or mortgage. But they’re not directly synced with each other.

Does an overdraft affect your mortgage application?

It’s unlikely you’ll be refused a mortgage just for being in your overdraft. If you meet the rest of the mortgage lender’s criteria (such as stable income and decent credit score) then you shouldn’t struggle to be accepted. 

If you’re worried about big credit card balances or a frequently used overdraft, get in touch to speak to one of our friendly Mortgage Experts. They’ll look at your options and help you find the right mortgage for your needs. Enquire now.

Do mortgage lenders look at overdrafts?

Lenders ask to see your most recent bank statements when you apply for a mortgage, so they’ll see from your running balance if you’re dipping into your overdraft. If you're constantly overdrawn, lenders might think you’re living close to the edge of your finances - but being in your overdraft won’t stop your application in its tracks. It’s a good idea to think about chipping away at it ahead of the mortgage process. 

Our Mortgage Experts can look at your options and advise you on how to prepare for your mortgage application. Read more in our How To Get Mortgage-Ready Guide.

How can I explain overdraft fees to mortgage lenders?

If you’ve racked up fees from dipping into an authorised or unauthorised overdraft, you do have opportunity to explain your circumstances. Your mortgage lender might ask for a letter explaining your overdraft fees, which your mortgage broker can put together and submit on your behalf. This is called a mortgage ‘letter of explanation’, and is fairly common. 

Mortgage providers look at your finances really closely when you apply for a mortgage, so it’s good to have the chance to explain the story behind the numbers. Working with a mortgage broker will really help when it comes to getting lenders to understand your unique circumstances. 

I got my mortgage rejected due to overdraft, what can I do next?

If your mortgage has been rejected because of overdrafts, don't panic. You might still have other options. Just because one lender has turned you down, doesn’t mean all lenders will. 

Being refused a mortgage can be frustrating and demoralising. It can be really hard to know what to do next, or where to turn. It’s tempting to apply to another lender after being refused a loan, but too many unsuccessful mortgage applications can negatively affect your credit report - the last thing you need! 

Our Mortgage Experts have a proven track record of getting mortgages for people who’ve been refused elsewhere. Almost half of our customers were told a mortgage was possible before finding us. Our experts will take the time to listen to your situation and explore your options. Make a quick enquiry and one of them will call you back as soon as possible. 


Our Mortgage Experts are fully-qualified with experience in bad credit, self-employed and complex mortgages. They have a proven track record of getting mortgages for people who’ve been rejected elsewhere.

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