Refused loan with good credit! Advice anyone?

KittycatM

Hi everyone,

It's my first post on here and I would like some advice and or insight really. I graduated last year and had a student account with the halifax with a huge overdraft of £2750. I also have a £750 credit card and a £1500 credit card, of which I am paying off the minimum amount a month! I'm earning approx £1000 a month, pay everything on time including home phone, broadband, mobile contract, any other direct debits pay all my credit card bills on time, never go over my overdraft!
So as I've not cleared my overdraft I decided to try and take out a loan for £8000 to cover my £5k debt and have some left over for a new car and put some away to start some savings. I went to the co-op bank and while I was there I also switched to the privilege plus account and that was opened straight away, the girl in branch said everything looked good but they needed 3 months worth of bank statements. So I sent them in and my request has been declined. The branch said that my credit score was fine, but there was something wrong with the bank statements! All I can think of is the fact I spend a bit too much on clothes and don't really clear my overdraft, but everything else is paid on time. I'm panicking a bit as my overdraft is due for review at the end of the month and I wanted to have it sorted with this loan. I'm also scared of applying elsewhere in case it damages my credit rating! Although I've been told I'd need to apply around 4 or 5 times before I got stung!

Sorry for the long post but I'd be so grateful if any of you could help!!

M

naijapower

I think you should appeal against the decision. Seems harsh to me as your credit record is good. An U/W may well overturn the decision on review

nikki2804

TBH i think it really depends on the lender these days. Ive got a great credit rating, credit report shows no defaults etc but I was declined for a Tesco credit card. Ive never had a late payment or anything in my life (i have had one bank charge which im still kicking myself over as it was my error!) but still refused.
Are you associated with anyone? I.e partner at the same address, cos i think thats why mine was declined.
In regards to the overdraft, if they take the facility off you ask them to set up a payment plan say £100 per month until its clear. They did this for my partner (well it was Lloyds but im thinking all banks will be the same)

KittycatM

I really don't know, the woman in branch said that they had appealed by sending in the bank statements but that they couldn't help any more and I would have to appeal myself. She said if I explain that my overdraft was massive due to being at uni and living off a student loan it may help, but I'm not sure! I thought the co-op were meant to be one of the nicer ones and easier to get credit with!!

lucky_me_2

Hi Kitty,

I am in the same boat as you are..I have a good credit rating..I borrow money but always pay it back on time..I earn £1200 a month with around £700 to spare every month minus the essential bills such as my car finance and rent..Anyway I recently went to my bank and was declined a loan they could not tell me why and they were also quite shocked that it was declined so I took a look at my credit report to see if this has any problems/errors..I found a site that gave me free access to my credit report (not my score) for a month..I dont know if I should put the address on here so here is the name: Credit Expert just do a Google....

I found that there was nothing wrong but like you I only paid the minimum amounts on my credit cards and so have now decided to pay just a little bit more (£50) a month of each I have two becuase I did a balance transfer £500 on one and £500 on the other (I moved £500 to the Egg card which is 0% interest until April 2009 and moved the other on to the Barclaycard Simplicity which is 6.8% for life - this may seem high but compared to my previous card at 18% it is much better..) anyway the amount has started to go down slowly and I will look at applying for a loan again towards the end of this year..

The best thing I can advise is to try and pay a little more of you overdraft/credit cards etc and leave it a good 3-6 months to apply again..I would not apply to many times as the applications do appear on your credit report (you will see if you use the free service mentioned above)

You could also consider doing a balance transfer on your credit cards and looking for a better deal..there are lots of articles on this site that will help you

The banks are being very careful at the moment and so you may find it harder than usual to get credit..2 years ago when I got my car finance things were much easier...

If you need anymore advice just pm me..I am in a similar situation to you and I too prefer to spend my money on clothes lol

fozmcfc

You need to look at it this way, you earn £1000 a month, you owe £5000, you want to get a loan for £8000, thus making your total debt £13000.

On paper that how it looks to them, the bank has no guarantee that you will use the £8000 loan to pay off the £5000 you already owe.

I myself have been turned down for a loan and then accepted for two 0% balance transfer credit cards for double the amount of loan I wanted. You might find it easier to be accepted for a credit card with a 0% balance transfer, so you basically stop paying lots of interest on the two credit cards.

You might be able to get a smaller loan to pay off the overdraft if the loan is from the bank you have the overdraft with. It might be worth waiting a few months down the line before trying for a loan again.

Grovester_2

Try paying more than the minimum. This looks like you can only just pay them so another loan might prove to be tricky.

Have you asked your existing credit card comapanies to see if they will up your limit so you can transfer one of the balances? Or as above try for a 0% or low for life transfer.

KittycatM

Well I called to appeal today and they said it was because I was living off my overdraft. She did say she understood it is hard to break out of it and she was surprised I'd been rejected as I managed to open the privilege premier account straight away! She said I couldn't appeal any further, which wasn't what the woman in branch said and now I've no idea what to do, I've got to go to the Halifax soon to discuss my overdraft and I really wanted to have something in place to get it sorted, I also desperately need a car. It's annoying as I really don't want to have car finance, I just want one monthly payment, I've planned my budget and I'd be much better off. I really don't know if it's worth applying elsewhere but I feel really desperate and I'm getting really worried!

asbestross_2

Hi KittyCatM,

Might sound like a silly question but are you on the electoral roll? Around 6 months ago, with quite a bad credit rating I sucessfully applied for a Littlewoods account; my mother on the other hand was refused with a perfect file and mortgage paid every month. The only difference, I was registered on the electoral roll, she wasnt.

This can be the key factor to your application being refused

Hope this helps

Ross

KittycatM

Yes I've lived here with my parents all my life, (23 years!) and been on the electoral roll since I turned 18. My mum says people with good credit can get turned down and I've even read it on here, I just feel very disheartened. I may pop into the Halifax on Saturday and see if they are any more helpful than last time - when I asked about a loan there and their premier account the guy in there was about as much use as a chocolate teapot, so I went next door to the co-op to see what they had (after Natwest, Lloyds and HSBC proved how uninspiring they were!)

lucky_me_2

The best thing to do is to pay some off your overdraft if you can..you should try to, I am afraid that in these times this is the only way you will be able to get credit is if you clear some of your debts! Getting a car on finance/taking out a loan will only add to the situation adn you will find it harder to pay back with an overdrat to pay back too....

I really would consider maybe saving for a few months to buy a cheap car, pay off as much of your overdraft as possible and then next year if you still want to you can then try and apply for a loan and you will have paid off some of your debts.