Treasury Committee launches inquiry into Credit Searches in conjunction with MSE

edited 6 October 2009 at 7:18PM in Credit Cards
69 replies 15.6K views
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  • Its about time something was done about this.

    I applied for a loan with Lloyds TSB, I have one of their Premier Accounts that I pay £25 a month for.

    I was told that since I had one of these accounts I was eligible for a loan at the rate of 5.9%

    I applied as I needed to decrease my outgoings and was then hit with a rate of 19.9%

    I was told at the time that my 'risk score' would decrease within a few months if I kept the payments up, I have since made 19 monthly payments, on time and in full and if they were to offer me a loan now, it would be at a monstrous 24.9%

    I have gone overdrawn only once in this time, by £7 and for only a few hours.

    Its time they were stopped from robbing us, I am not against them making a profit, but extortion is another thing.
  • nettlesnettles Forumite
    76 Posts
    Some time ago, I applied for a Capital One card. It was something like 14 month 0%apr then about 7.9% I think. What I actually got was 3 months at 0% then an interest rate of 22.9%. I have not missed any payments on any accounts in the last 6 years, and always paid at least the minimum payment on this card, sometimes more. The rate was recently hiked and is now almost 30%. Needless to say, it is being paid off as quickly as possible, and will only be used in an emergency.
  • CMM_2CMM_2 Forumite
    2 Posts
    I can not see how this practice is open and transparent - nor can it be fully socially inclusive.
    Where is the competitiveness here - how can they justify 20+% interest in today's low interest rate market?
    Top names are competing with 'store cards' it seems - but they do not have a 'typical' ambiguous rate.

    Rates quoted monthly on CC statements the APR is not clear ...
  • During 2000 I needed a loan and contacted Lombard Direct as they advertised their rate at 7.8%. After giving Lombard Direct all my details I was shocked to be offered a loan at just over 12%! When I protested they told me I was a risk and that is why I was put on a higher rate although when questioned they couldn't justify this. The odd thing was I have never defaulted on anything in my life and I earned over the national average!

    I declined and sold my car instead.
  • I applied for a loan with the AA about 6 months ago. I wanted to consolidate 2 loans, one of which was already with the AA at a rate of 6.8%. I didn't require any additional funds. My aim was to reduce my monthly payments by taking the new loan over a longer term. I have a good credit rating with no arrears or missed payments. I was offered a rate of 13% with no explanation as to why. I wrote to the underwriters to appeal, however I was still offered the higher rate. Needless, to say, I didn't proceed. I also had a quote from Lloyds TSB as the other loan was with them, again I was offered a rate of 13%. I now have 2 credit searches on my credit file, therefore I have decided not to consolidate and stay as I am. Further quotes could cause more damage to my rating.
  • I have no outstanding loans or credit card debts, but want to have a credit card with a low rate of interest for online purchases etc. The Barclaycard 'Simplicity' card, at about 7% APR, seemed to be the best bet. So last month I used the Barclaycard pre-application check to see if I might get accepted, and was given a very high probability. Then, having gone through the application process, I was offered a card at a rate of 24.9%!!!

    Frankly insulting.

    Needless to say I turned it down, but the search is now on file should I wish to apply for any other credit cards.

    Also, given that the base rate is at a record low for the seventh month in a row, am I the only one who thinks it immoral that credit card interest rates have at best remained unchanged at 'typically' 17 or 18%, or even increased?
  • klf268klf268 Forumite
    3 Posts
    I took out a £4k loan about 6 years ago for a car through my bank (HSBC) from what i recall about 14%. After a about a year i was called by a company HFC Bank Plc offering me a loan at a better rate, so i popped in at my local HFC Bank to discuss this, they told me there where sister company of HSBC. We agreed a lower % rate of about 12%, so i signed the documentation and that was it and they said they would send a copy of the signed documentation in the post. I never received it.

    After the 2nd payment went from my bank account, i questioned it and set up a meeting at the HFC Bank as i did not agree to the repayment amount. When we had the meeting i had found out that i had signed a document for a loan for 29.9%, i did not agree this. I asked to see the lady who sold me this loan, but i was told she had left the company. For compensation all they would pay was the parking metre and wouldnt even lower the % rate.

    I had do something about it quickly, so i had to apply for another loan from Halifax with lower % to clear that debt and to this date i am still paying it off.

    I tried again last year to ask them to foward me a copy of my agreement however i have found out the offices are no longer there.

    This was my first loan and i have definitely learnt from this experience.
  • RafterRafter Forumite
    3.8K Posts
    Totally agree with the campaign but think it is wider than simply searches being recorded.

    The banks also need to protect themselves from fraudsters who might apply for two loans simultaneously which in combination would be totally unaffordable.

    The law needs to be changed so that loan advertising makes clear what type of customer will get the advertised rate or that customers who don't get the advertised rate are declined and told whether an alternative product is available but without any search being recorded.

    I have previously worked for a loan company and know that they deliberately managed offers so that only 66% got offered the advertised rate - that cannot be right and is an advertising regulation working against consumers interest.

    Something also needs to be done about debt consolidation though, so that a customer can consolidate their existing debt at a reasonable rate, in return for surrendering their existing credit cards and loans. I.E. The consolodated loan would definately be used to repay existing debt.

    I also think that we need a 'debt reset' law that means if someone has built up debt more than 50% of their gross income that they can by law consolidate it into a repayment loan at say 10% APR rather than be at the mercy of credit card companies increasing their APR to 30%+ and tipping them into more drastic measures such as bankruptcy.

    This would give credit card and loan companies a proper incentive not to lend too much and would mean that consumers with high interest rate debt would be able to pay it off over a reasonable timeframe rather than being stuck in a horrible debt spiral.

    R.
    Smile :), it makes people wonder what you have been up to.
  • judygarlandjudygarland Forumite
    399 Posts
    Part of the Furniture Combo Breaker
    ✭✭
    [QUOTE=

    CallCredit and Equifax are two totally different CRA's who operate differently and as such the data they provide will differ somewhat.

    Just my point of view but valid all the same.[/QUOTE]

    I used to work for the lender that used Callcredit after using Equifax and Experian. I used to find that Callcredit had loads of information missing and could be quite out of date.
  • powerful_Roguepowerful_Rogue Forumite
    5.4K Posts
    Part of the Furniture 1,000 Posts Name Dropper
    ✭✭✭✭
    Applied for a loan with Asda 3 weeks ago to cover the cost of double glazing. The advertised rate was 9.9% typical.

    Went though the process and at the end was advised I had been accepted at 17.9%

    Phoned Asda up straight away and asked then to cancel the loan. Ive got a virgin credit card with a limit big enough at only 15.9%

    I then phoned Barclaycard who I have an account with and asked them to increase my limit, which they did with no problems. APR 9.9%
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