Number of credit cards affect loan lending?

FTB83

Hi there

I am in the midst of buying a new car (very within my affordability) but for which I would like to get a car loan (c. £5000 over two years). My credit score, according to Credit Expert, is 999 (excellent). I have had a car loan previously, I currently have a joint mortgage (for which my partner is the main payer) etc, so I do have a reliable credit history which I know firms like to see.

In addition to the above, I currently have three credit cards all with zero balances (for info, the first has a £5,600 credit limit; the second has a £1000 limit; and the third has a £3,600 limit with 0% on balance transfers for 12 months).

Does the number of cards I have affect whether I'll be able to get a loan? (I've basically balance transferred a couple of times and never got round to closing the accounts).

The main reason I ask is that I was told by Nationwide recently (I have my current and savings accounts with them) that I didn't fit their criteria for loans. The reason they gave is that they assume that I pay the entire mortgage and bills which takes up nearly all of my salary (I explained that the mortage is joint and that I actually only pay 40% of ALL household outgoings, but they wouldn't accept that this makes a difference). I wondered whether my credit cards (and the potential they offer for borrowing) with them made a difference too, as my credit history etc is excellent? I'm just a bit confused as you can probably tell! I just want to make sure I make myself as risk-free as possible before applying to another company.

Thanks,

FTB83

Rafter

FTB83,

Lenders do have an obligation to assess whether an unsecured loan is affordable for you.

Some, like nationwide, might go into some detail, some might make more reliance on your payment history, income level and size of your existing debts.

Generally however, if your application form shows you have a lot of outgoings against your income and not enough 'surplus' income to make your loan payments then you may find it tough.

Your 'available credit', that is unused limits on credit cards may have an impact though and if you have no plan to use these cards again, might be worth closing them or getting the limits reduced.

Your credit score is only one factor and suggests you are up to date with payments, don't have too many credit accounts and are on the electoral roll. Lenders will also take account of how long you have been in your current job and other factors that might not be on Credit Expert. Remember experian don't know your income levels or how long you have been with current employer for example - all important factors when considering the risk of lending to you.

Good luck

R.

FTB83

Thanks Rafter - that makes good sense and has clarified things for me. I completely appreciate responsible lenders are thorough, and that Nationwide was trying to act in my interests. I'll close two of the cards I think, and keep the third as an emergency card.

Another thing that worried me is that I have seven credit searches on my file for the past three months - two of these are Nationwide, and the others relate to my other half (as we are linked on the mortgage, whenever he applies for credit - in this case for a new business - the searches are notched up on my record too). Is this number of searches too high do you think?

Thanks, and sorry for all the questions!

Lauren

thriftymomma

I think they say about 2 searches every six months is what they like. 7 may be considered high, although I have seen some on here who have waaaaay more than that. You just don't know at the end of the day.