good credit score gone bad

pollypig

Hi all

I wonder if anyone has any advice. I would like to take out a loan for £15k over 3 years to pay off credit cards and buy a used car. Alternatively, I would just be borrowing £6k to buy the car.
Before I applied for a loan I got my credit score from Experian and it came back as 935 - so I thought I was going to be fine getting a loan. I applied for a loan with Lombard Direct and got declined, applied for Direct Line, again declined. So I decided that the safest option was to apply to my bank where, whilst they wouldn't have the cheapest interest rate necessarily, they would be more likely to accept me knowing me and my financial history. Alas, no! I was declined for this as well.

After I was declined for the third loan I decided to check my credit score one more time - from the three loan applications it has gone down to 640!!! I can't believe it. I have a good income, never miss payments on my cards or go over my overdraft limit. I can make the repayments easily.

Has anyone got any advice as to why my credit score dropped so dramatically and where I could turn to next for a loan? I need a car for my job but my company only over a car allowance each month rather than a company car scheme. I really don't want to go down the finance route with the garage if i can help it...

thanks!

maforduk

Your loan has dropped so quickly for the quick consessions of applications for a large amount of money.

Best thing that you can do is speak with the loan provider directly and explain your circumstances etc.

Good Luck.

grumbler

Time applications correctly. Many credit searches, (the note left on your file when you apply), in a short space of time hurts your credit score. Space out applications, not just for credit but for car insurance, mobile phones and others, as all can leave searches on your file.
Your Credit Rating: How they decide and how you find out for free

The number of searches and accounts opened in the last three to six months has an affect on your credit score. The stoozer or rate-tart should try to minimise the number of credit searches that are done on their file. Stoozing.com’s guidance has been that either of the following approaches seems to be acceptable: either one search per month for no more than 10 months of the year, or 2 or 3 applications within a month followed by none for 4 to 6 months.
http://www.stoozing.com/cred4.htm

Instead of keep on applying it was better to try finding out the reason of rejection by phoning a lender or by appealing the rejection.

BTW, I don't think it is a good idea to borrow another £6K for a car while already having £9K debt.

maforduk wrote:

applications for a large amount of money

Amount doesn't matter as it is not shown on credit files. Only searches are shown.

maforduk

grumbler wrote:

Amount doesn't matter as it is not shown on credit files. Only searches are shown.

Your right, it doesn't show up on the Credit File, BUT...It does matter to the lender by them judging how much money is available to you.
i.e. Having loans already, Credit Card's etc.
This all impacts their decision.

pollypig

Thanks for the advice, and I did know that credit applications could have a negative impact - just didn't realise how dramatic that impact would be! I have actually been into my bank this afternoon and they seem confident that I can appeal the decision about the loan and that they will make funds available to me as I pay my wage into the account held with them.

And no, it isn't the best idea to borrow a further 6k for a car. However, I travel across the entire north of england (lincoln - carlisle) for my job and this is very difficult without a car - my current car is about to die so I have no other option unfortunately. Because of the nature of my job, the car needs to be reliable and comfortable. I would rather not borrow any money but IF I do manage to borrow the funds then I will be debt-free in three years. Thank you for your concerns though!

Experian_company_representative

It's always a good idea to try to find out why you were refused before making further applications. Did you Ask Lombard Direct and Direct Line for explanations? As well as your credit report, lenders will also score your personal circumstances (job, home, relationship, time with bank etc). Contrary to some information above, the amount of credit you are applying for is often shown on your credit report as part of the search record, so others lenders can see this and may take it into account. Did your bank tell you why your application was originally refused?

pollypig

Thanks for the helpful (and non-judgmental) response! I have had the standard letter from Lombard Direct saying that I didn't meet their requirements but they can't give me any further information - I know that my income/personal circumstances should be fine so I can only imagine that they want the very top people for their loans...

I have now been into my local branch and asked them about the loan - they were a bit confused themselves as I have my wages paid into my current account with them so I have written to the loans department appealing the decision - fingers crossed they will accept it this time!

The worst thing is feeling a bit ashamed that I got rejected I guess - I thought I was a good bet credit score-wise but clearly hadn't taken into account the vast array of things that can affect it!

pollypig

...when banks are involved?!
So, I went into the branch with my appeal letter and the woman in the branch SAID that she had faxed it through to the appeals dept and that I would get a response in a few days... this morning I phoned the loans helpline to be told that nothing had been received :mad: so I've had to fax the appeals department myself - why could I have not been told to do this in the first place??? And now I'll have to wait another few days to hear from the bank, probably only to be rejected again!
There isn't really a question here, it's more of a rant about the incompetence of bank staff! Oh, and the fact that of course customers are not allowed to ring the underwriting team directly so all I can do is wait for the bank to ring me - who knows when this might happen?!?! This is what I get for trying to do the responsible thing and apply for a low-rate loan!

pollypig

Hi again

Not sure if anyone is reading or indeed interested in this thread, but at least it gives me the chance to write down my rants!

Having said this, I have just come off the phone to my bank who, after reviewing my application, have offered me the full loan at the advertised typical online rate - excellent! I feel like I can finally get in control of my debts and start living within my means (I know... not strictly true as I will be £15,000 in debt but at least my monthly outgoings will be less than my income!). The plan now is to get my credit score back to good and to start saving money so that, hopefully, I can pay the loan off early! (and of course when I want to do that I'll be coming back here for advice on what to do!)

So, although not many people have responded to my thread, I would like to say a big thanks to you all, and Martin!, as the various other threads I have become addicted to over the last week or so have given me invaluable advice on what steps to take to get out of my debt. Debt-free by 28 fingers crossed (25 at moment!)

Px

steggy_2

Well done pollypig.

I'm in a similar situation, I need to borrow £14,000. I'm currently in the process of getting back the charges the bank has charged me over the last 6 years and I'm worried they my close my accounts in retaliation. So I'm looking for a loan to pay this off with, hopefully at a lower interest rate (8.9%). But Directline, Lombard & Cahoot have declined me.

Both Directline & Lombard recomended a company called PLC for loans in the email they sent, did you try these whilst looking?

Steg

pollypig

Thanks Steggy... it feels good, although having had another tot up of my credit cards I think I'm going to have to cut back for a few months just to clear them all - my loan doesn't quite cover it - eek! still, by Christmas (always my target... has been for 3 years!) at the latest I should only have the personal loan to worry about...

As for PLC, no, I didn't bother giving them a go as I had already been declined for two loans and thought I would be safer going with my bank... don't know much about them but assumed they would be offering far higher rates... perhaps other, more knowledgable, folks that post on this site may be able to help...? might be worth starting your own thread to see if you get any replies?

Ta
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