Am I more likely to be granted a loan with my current account supplier?

alexthecheese

Hi there

Have been refused twice in the last couple of weeks for a loan of £7500, due to about 4 accidental missed payments on a credit card over the last 2 years or so.

Would I be more likely to get a loan with my bank, or would they be just as likely to turn me down?

Also, would I be compounding the damage to my credit rating credit (which is 'good', and just shy of 'Excellent', according to Equifax) by applying for another loan after two have just been rejected?

Thank you.

Tixy

You are more likely to be accepted for a loan by your current bank providing you have managed the account well (assuming that the credit card with missed payments isn't also the same bank).

But that said its often advised not to have more than 3 applications for credit in a 6month period.

Did the providers you approch tell you specifically it was because of the late payments? if not it could be for other reasons (such as affordability or amount of available credit).

You could go into your local bank branch and explain the situation and see if they can give you an indication as to whether you would be accepted before they actually do a credit search.

alexthecheese

No, they didn't say that it was specifically down to some missed payments on the credit card - they're the only flaws on my otherwise good credit rating so I assumed it was just down to that.

I do have a lot of credit available to me, perhaps that is why I was refused. I have a £6k HSBC C/C (current account's evil brother), a Barclays with about £4/5k available and a Halifax with £2.5k limit. That's about £13-14k of available credit.

I have £2k on my Halifax, which is an interest free balance transfer, and £1700 on the Barclays - which will be cleared in about a week or so once I sort out my finances. So that will leave me just £2k on interest free which I will pay off within the 9 months transfer I got.

Should I just close down the Barclays once paid, and then consult my bank?

alexthecheese

Oh and I have a business credit card with £3k available on it, but that didn't appear on my credit report, so I presume it's not linked directly to me?

kaisersoze_2

alexthecheese wrote: »

No, they didn't say that it was specifically down to some missed payments on the credit card - they're the only flaws on my otherwise good credit rating so I assumed it was just down to that.

I do have a lot of credit available to me, perhaps that is why I was refused. I have a £6k HSBC C/C (current account's evil brother), a Barclays with about £4/5k available and a Halifax with £2.5k limit. That's about £13-14k of available credit.

I have £2k on my Halifax, which is an interest free balance transfer, and £1700 on the Barclays - which will be cleared in about a week or so once I sort out my finances. So that will leave me just £2k on interest free which I will pay off within the 9 months transfer I got.

Should I just close down the Barclays once paid, and then consult my bank?

The way any lender will look at this is to say you have £3700 of outstanding credit, could borrow a further £13-£14k and want to add a further £7500 to the mix, giving a possible total of 25k worth of credit.

Obviously it depends on your salary but i would say this has more chance of been the problem than the 4 missed payments over 2 years.

Can you close any more of the credit cards and then apply for the loan?

alexthecheese

kaisersoze wrote: »

The way any lender will look at this is to say you have £3700 of outstanding credit, could borrow a further £13-£14k and want to add a further £7500 to the mix, giving a possible total of 25k worth of credit.

Obviously it depends on your salary but i would say this has more chance of been the problem than the 4 missed payments over 2 years.

Can you close any more of the credit cards and then apply for the loan?

Thanks. You're probably right. When you actually sit down and think about these things, that is a serious amount of money. I don't want that amount of credit - for the past 2 years I've been slowly munching my debt down to just £2k which I'll soon be left with. I don't like credit cards any more!

I can close the Barclays account in a week or two, but I want to keep the Halifax as it's 0% APR and is obviously saving me money at the moment. I'm not sure if I can close the HSBC credit card account that's linked to my HSBC current account, can I? That has nothing on it any more, despite having a £6k limit, so if I could shut it down I presume that would help me?

Tixy

Yes I would suggest you close the HSBC card (you certainly can even though you have an HSBC current account). You could also request your barclays limit is reduced to say £2k. That would certainly put you in a better position.

In fact if you are thinking of approaching HSBC for a loan you could discuss the empty cc with them and explain that you'd like to close that and apply for a new loan with them, and they should give you an idea of whether they would loan to you without doing a full credit search. In effect you would only be increasing your potential liability to them by £4k, plus it would be on a formal repayment plan not revolving credit.

alexthecheese

Thanks guys. Really appreciate this.

I'm not going to apply for a £7.5k loan any more, all this has made me think twice (probably a good thing) and decided that I will aim for a £5k loan. It's for a vehicle.

If I close the £6k HSBC, trim the Barclaycard to £2k and leave the Halifax at £2.5k, that leaves me with a £5k loan and £4.5k credit: £9.5k total. I'd like to keep a credit card with space on it for emergencies, should I suddenly need some csh.

I earn £30k, with the above is that more likely to be getting me somewhere?

Tixy

That certainly looks more reasonable figures, of course no one can say for certain but you would be putting yourself in a much better position than you had previously outlined so would look to be a more desirable customer to a potential lender.

Once you close the accounts/reduce the limit they can take up to a couple of months to show on your report (as mostly these items are reported to the CRAs monthly)

CLAPTON

be cautious about reducing your credit limits
they may run a credit check on you and they may reduce the limit more than you would like

having reduced your debt to 2k so why borrow 5k more... you can get a decent motor for about 2-3k

alexthecheese

Well, and I don't want to go into this in too much detail as it'll only make me look like a complete plank, but I've already bought the vehicle. It's a campervan, cost £5k and I picked it up a couple of weeks ago.

It was a bit of a quick transaction, and I borrowed £5k off my girlfriend because she wanted me to get it so we could use it in the summer, on the basis that I'd be able to get a loan and pay her back within a couple of weeks. The £7.5k loan was intended to give me the money to do it up. It needs a respray etc. (but that's irrelevant).

You can kinda guess the rest, I went to apply for the loan only to be refused. *insert facepalm here*

So, I've agreed to give her the money back over the course of the year, in monthly installments, but I'd rather get a loan so this doesn't hang over us in anyway. We've drawn up an agreement, will be signing it this weekend, so she gets her money back and any interest she's lost on the money from giving it to me, and we should be good by the end of the year. The agreement/receipt is to make us both feel at ease - I am not liking the idea of oweing that amount of money to her.

So, er, yeah. Kinda need to sort this out if possible - hence the thread and my greatfulness your great replies.