The hidden festive risk of credit cards and Buy Now Pay Later

The hidden festive risk of credit cards and Buy Now Pay Later

Every December, millions of people across the UK lean on credit cards and Buy Now Pay Later services to make Christmas feel a little easier. With higher living costs and stretched household budgets, it is completely understandable that many families spread payments over a few months.

But there is a hidden risk that many borrowers only discover when it is too late. What you spend in December can affect your mortgage options in January, February and beyond, even if you have never missed a payment before.

Why festive borrowing matters for mortgages

Lenders pay close attention to your credit behaviour in the months before you apply. A sudden rise in credit utilisation, a new BNPL agreement, or even a slightly late payment can change the affordability calculation a lender uses.

Here is what can happen if festive borrowing is not managed carefully.

Your credit score can take a hit

Missed or late payments, even by a few days, sit on your credit file for six years. That can mean higher interest rates, reduced borrowing capacity or, in some cases, a declined mortgage application.

High credit card balances reduce what you can borrow

Lenders look at your overall debt and your monthly committed payments. If you carry higher balances into the new year, your affordability can fall, meaning a lower maximum mortgage amount.

BNPL is no longer invisible

Many BNPL services now appear on credit searches. Even if there is no interest, lenders still factor these commitments into affordability checks.

Self employed borrowers feel it even more

If you are self employed, lenders already examine income trends, expenditure and tax commitments closely. Adding extra debt in December can reduce borrowing power, especially when lenders are already stress testing budgets against higher living costs.

Why this matters for early 2026 buyers and remortgagers

January to April is one of the busiest periods for mortgage applications. Many homeowners on lower historical rates will be remortgaging, and lots of first time buyers use the new year to begin their home search. That is exactly when festive borrowing can have the biggest impact.

Even responsible borrowing can affect your next steps.

For example:

A £2,000 balance on a credit card could reduce your maximum borrowing by several thousand pounds.

A missed BNPL instalment could push you from a high tier credit score to the next tier down, increasing the rate you are eligible for.

A sudden spike in spending can trigger extra lender checks that slow down an application.

Tips to protect your mortgage options this Christmas

You do not need to avoid credit completely, but a careful approach will keep your options open in the new year.

Plan your January payments now

If you know you will carry a balance into 2026, make a plan for clearing or reducing it as early as possible.

Keep utilisation low where possible

Try not to use more than 30 to 50 percent of your available credit limit. Lenders often view higher utilisation as financial stress.

Set up direct debits

Even a minimum payment by direct debit protects you from accidental missed payments during a busy month.

Limit BNPL to essentials

Multiple BNPL agreements can appear as several active debts. If you use them, keep the number low and repay them on time.

Speak to a mortgage adviser early

If you are planning to buy, remortgage or release equity in early 2026, get advice now. An adviser can check your credit file, review your options, and give personal guidance to avoid issues before they arise.

How Prospect Tree Mortgages can help

We help clients navigate the mortgage market every day, and we see the real impact festive borrowing can have. If you have questions, are unsure about your credit file, or want clarity before you use any form of borrowing over Christmas, we can talk you through the safest approach for your goals.

A quick conversation now can prevent a mortgage headache later.

Your home may be repossessed if you do not keep up repayments on your mortgage. The information contained within was correct at time of publication but is subject to change (published 08 December 2025).