Credit refused, even though I have perfect credit rating?

Wabiloo

Hi!

There's something untowards happening to me. I have what I believe to be an almost perfect credit rating:
- Very good salary
- Cheap rent, less than a 3rd of what I bring home (after tax!) every month
- All bank accounts in the green
- 2 credit cards with balance at £0 at the end every month, and all payments made in time (direct debit)
- No store card, a single loan for a small amount (£4000 over 24 months) paid monthly by direct debit.

And yet...
I tried to apply for a £10000 3-year loan to buy a car. Actually, indirectly so. I paid for the car with my savings (I didn't want to go into finance), and want to use the loan to replenish my savings account, which I keep as a deposit for a house (I'm actively searching to buy). On the basis of the advice on this site, I applied for a loan:
- A&L at 8%. I was told the loan was approved, and therefore went to buy the car. When I got the paperwork however, they sneakily put it at 13.7% instead of 8%. HUGE difference...
- I then tried with Asda, and the loan was refused
- I then tried with Sainsbury, and again the loan was refused...

What the hell? They obviously can't tell me why...
I checked my Experian credit report (I have an account with them), and also checked it with Equifax (by getting a 30-day trial). As far as I can see, neither shows anything negative about my credit rating. Everything is in the green.

So, what on earth is going on?
Have I just been done? Am I now going to have to wait another couple of years to rebuild my savings gradually before I can hope to apply for a mortgage? Or alternatively take the 13.7% offer and effectively lose more than a grand (compared to what I would have got from the dealer with finance?)
There is something really wrong with this country!! :mad:

Advise or help would be very welcome right now...

tamarto

There is something wrong with this country because you can't borrow what you want when you want to?

oh dear oh dear oh dear...

ALIBOBSY

They don't like to see many applications/searches on a credit record one after the other. Although as in your case there can easily be a logical,reasonable explanation. The banks assume lots of applications mean the person is "desperate" for credit.

Banks on the whole seem not to want to lend to anyone these days and when they do they want to screw as much out of people as possible (remember both the BOE base rate and the interbanking lending rate are very low, but interest rates across the board have not fallen as much and on many products have increased). Basically the consumer is paying twice for the banks incompetence, we stump up our tax money to bail them out, then they screw everyone over with rates etc (see offset mortgages being withdrawn, overdrafts being instantly recalled, cards having balances reduced drastically etc etc).

Something to remember is if you were going to apply for a mortgage they would take into account the 10k loan and reduce what you could borrow accordingly. Better to save up again really.

ali x

Typhoon2000

Borrowing to replace savings sounds all wrong to me. Still with house prices looking like they are about to head South again, maybe its a blessing in disguise.
Maybe they felt you were over commited or had too much credit already? What are the limits on your cards? Add the £14000 potentially in loans and is it getting close on half your annual salary or more?

StuTheDon

Hi - couple of points we need to know to help you out. Firstly, what is your salary approximately? Also, what are the credit limits on your two existing cards?

My bet is that the two credit cards, along with the 10k loan are adding up to a significant amount of available credit (even though you are not using your cards) and, as a percentage of your salary, it is too high. An option would be to close one of the cards and try again in a couple of months.

On another note it is a bad idea to use the loan for the deposit - you are asked during a mortgage application where the deposit came from and, if it is from a credit source, it is not counted or accepted.

Mini_Bear

Also were you refused because you have moved several times in the last few yrs and are perhaps not on the voters roll in your area?
That often makes a difference.
Also wont the 10k loan you will use as a deposit go against your potential mortgage? - why did you need a 10k car just b4 you bought a house? surely you could have gone 2nd hand paid 4k, still had 6k in the bank and saved ££ until you were back to your 10k deposit.
just my 2 pence.

nboyle

Have you tried talking to your potential loan providers and asking them exactly why your application was rejected?

They should be able to give you their reasoning - and then you can see if it's anything to do with your credit rating/cards/finances.

Also, go to your bank (the one you hold your main account with) and explain this to them - they may be able to offer you more specific advice.

Hope you get this sorted soon!

Wabiloo

tamarto wrote: »

There is something wrong with this country because you can't borrow what you want when you want to?

oh dear oh dear oh dear...

Nope, there is something wrong with this country because someone without any debt (me) cannot borrow a relatively low amount of money, whereas people riddled with debts still can (I know of several cases personally)

StuTheDon wrote: »

Hi - couple of points we need to know to help you out. Firstly, what is your salary approximately? Also, what are the credit limits on your two existing cards?

I didn't think about credit cards. My credit limit on the cards is £13000 in total. I never use any of it, but the reason it's so high is that I asked for an increase in the credit limit on one, as I was hoping to pay for the car that way. However, the dealer refused, given the stupidly high percentage they'd have to pay on the transaction...
My salary is fairly high. I don't really want to publish it (too easy to identify me), but let's say I'm a IT consultant working in the City. It is multiple times the price of the car.

StuTheDon wrote: »

On another note it is a bad idea to use the loan for the deposit - you are asked during a mortgage application where the deposit came from and, if it is from a credit source, it is not counted or accepted.

I know that, and that's precisely why I decided to ask for a loan to buy the car, rather than use my savings: in order to leave it untouched and use it as a deposit on the house. The fact that I paid from the savings is just (or so I thought) in order to speed up the transaction to the dealer.

Mini_Bear wrote: »

Also were you refused because you have moved several times in the last few yrs and are perhaps not on the voters roll in your area?

That's a bit unfair, methinks. The fact that I move should be irrelevant. I move because I need to for my job.

Mini_Bear wrote: »

why did you need a 10k car just b4 you bought a house? surely you could have gone 2nd hand paid 4k, still had 6k in the bank and saved ££ until you were back to your 10k deposit.

It is a 2nd hand car. I bought it precisely because I want to buy a house. I have a significant commute into London and houses by the train station are stupidly expensive in my area. Having a car allows me to look further away into the affordable portion of the market. That I bought an expensive car may have been a little foolish, I accept that, but I love driving (for pleasure), often very long distances, and I wanted something comfortable. Given that I have no debt and very little expenditure and a good salary, I really didn't think it would be that problematic... I have spent my life saving. That's why I have no debt. It's the very first time I'm asking for a loan, and I really don't understand what's so outrageous about it that banks feel they have to decline. Unless obviously they think I'm too safe, and won't make them any money because I never will miss payments...

DGJsaver

Wabiloo

How big , to the nearest yard , is the chip on your shoulder ?

Mini_Bear

also if your an IT contractor in the City it may make you high risk for redundancy in the eyes of the bank.
im not tryin to be harsh re you not being on the voters role and moving regularly, but that is a part of how the banks credit score you.
did you ask the banks why you were refused a loan?

EmzJenks

Wabiloo wrote: »

That's a bit unfair, methinks. The fact that I move should be irrelevant. I move because I need to for my job.QUOTE]

It's not unfair its how it works. You could have the best credit rating in the world but if you've moved a few times in the last 2 or 3 years no one will lend to you. I know because it happened to me, I've moved (for various reaons) 4 times in the last 2 years and it is a BIG no no for lenders. You are considered unstable