turned down for an overdraft - will it affect my credit rating

aqueoushumour01

Hi. I opened up an account with Abbey to get an overdraft. I currently have a 5k overdraft with halifax but it's not 0%, hence the wish to move. I believe i was preapproved for 1k (as credit score was fine) when opening the account but i wanted them to match what I had elsewhere. They declined my application after viewing my bank statements from the halifax. The only thing i can think of is that I don't have my wages paid into my halifax account (the account is well maintained and has never been into an overdraft) so they wouldn't have seen much going in. Affordability wise it should be fine as I'm on a decent salary. My worry is that this will affect my credit score - I am saving up for a deposit for a house and I am worried being turned down will increase the interest rate i'd have to pay on a mortgage (first time buyer).

Have i got anything to worry about?

rocket-socks

aqueoushumour01 wrote: »

Hi. I opened up an account with Abbey to get an overdraft. I currently have a 5k overdraft with halifax but it's not 0%, hence the wish to move. I believe i was preapproved for 1k (as credit score was fine) when opening the account but i wanted them to match what I had elsewhere. They declined my application after viewing my bank statements from the halifax. The only thing i can think of is that I don't have my wages paid into my halifax account (the account is well maintained and has never been into an overdraft) so they wouldn't have seen much going in. Affordability wise it should be fine as I'm on a decent salary. My worry is that this will affect my credit score - I am saving up for a deposit for a house and I am worried being turned down will increase the interest rate i'd have to pay on a mortgage (first time buyer).

Have i got anything to worry about?

All that would be there would be the electronic footprint on your credit file that they credit scored you for the account, this would have decided the initial limit that you could have, any increase above this would automatically decline, and could be appealed to underwriters, who, in turn could overturn that decision, this would involve a additional check. Abbey do have their own inernal scoring systems, depending how account is run / credit turnover etc the limit could be raised for you in approx 3 months, usually they dont write out, youd have to call into branch or phone to find out

opinions4u

My worry is that this will affect my credit score - I am saving up for a deposit for a house and I am worried being turned down will increase the interest rate i'd have to pay on a mortgage (first time buyer).

As the poster above suggests, there is little to worry about. Some banks don't credit score certain overdrafts at all, they use an internal scoring system.

The key will be to avoid excessive credit applications prior to going for the mortgage. One shouldn't make a huge different on its own.

I think a couple of things you need to consider are:

- as well as saving for a house deposit, are you able to pay off or reduce your credit commitments? (a toughie when more saved = better mortgage deal, but more owed = lower mortgage amount)
- if you have a reasonable time gap between now and the mortgage, there may be a case for getting hold of your overdraft and any other loans/card debts and getting these consolidated if you doubt you can pay them off.

aqueoushumour01

rocket-socks wrote: »

All that would be there would be the electronic footprint on your credit file that they credit scored you for the account, this would have decided the initial limit that you could have, any increase above this would automatically decline, and could be appealed to underwriters, who, in turn could overturn that decision, this would involve a additional check.

It was the underwriters who declined me. I got the default £1k I believe when I opened the account but I wanted a bit more as it was 0% for 12 months.

opinions4u wrote: »

The key will be to avoid excessive credit applications prior to going for the mortgage. One shouldn't make a huge different on its own.

I think a couple of things you need to consider are:

- as well as saving for a house deposit, are you able to pay off or reduce your credit commitments? (a toughie when more saved = better mortgage deal, but more owed = lower mortgage amount)
- if you have a reasonable time gap between now and the mortgage, there may be a case for getting hold of your overdraft and any other loans/card debts and getting these consolidated if you doubt you can pay them off.

fortunately I have no debt and have never been into an overdraft. I just wanted one just in case.

Glad to hear it shouldn't affect my rating

rocket-socks

aqueoushumour01 wrote: »

It was the underwriters who declined me. I got the default £1k I believe when I opened the account but I wanted a bit more as it was 0% for 12 months.



fortunately I have no debt and have never been into an overdraft. I just wanted one just in case.

Glad to hear it shouldn't affect my rating

Did you appeal the decision after you got the default 1k, or were you simply told oh we wont allow you to increase it? If you didnt have to wait 24-48 hours on a decision on it it wasnt put to the underwriters

aqueoushumour01

i think the guy said that I was automatically accepted for a 1k overdraft but I had already said that I was looking for 5k. he put this through the system and said that it had to go to the underwriters for them to decide. the guy was off for quite a while and I wasn't actualy informed of the decision until about three weeks later.