Loan declined - can anyone explain this reason?

astyle

After deciding to sort out my debts, I applied to my bank (Smile) to roll my £9965 credit card debt into my existing personal loan (£3500 approx left on this from a 5 year loan). They said there would be no problems as I had a perfect repayment history etc etc.

It's now been declined due to "existing debt of £40k (yes, this I have) with a further potential exposure of £36k".. I asked what this meant and customer services said it probably means I have £36k available credit I haven't used - which is absolutely false! Admittedly Customer Service guy said I he wasn't sure for definite but I would have to ask the lending team - who aren't in until tomorrow (if they can get in due to the snow apparently!).

Does anyone know what this means?

nick.evans

Hi,

Have you tried the obvious, experian, equifax? possibility the information not correct, really worth checking. If you have a capital one card equifax is free, otherwise both offer 30day free trials

astyle

nick.evans wrote: »

Hi,

Have you tried the obvious, experian, equifax? possibility the information not correct, really worth checking. If you have a capital one card equifax is free, otherwise both offer 30day free trials

Yes, I've checked my credit report with all of the relevant companies and nothing explains this reasoning.

Fonz_2

I think quite simply the fact that you have £40,000 of existing debt, and are now asking to take on further debt is making this deal look high risk to the lender.

Unless you're earning serious money this commitment has got to be a fair proportion of your yearly salary.

Money_Saving_Professional

I think Fonz is right and the lender is seeing your overall debt against a proportion of your income and saying "no".

Mortgage rates are always cheaper than loan rates if you own a property you can borrow against.