Loans

sonofsmallface

Just a couple of questions on loans, one:

You know when you apply for a loan they ask you what it's used for i.e. home improvements, a new car, debt consolidation etc; does it make a difference? Meaning say they kind of score you in the process of applying, points for good credit, points for good income etc is there a purpose for the loan they prefer? Like they prefer giving loans for debt consolidation than say, a new car.

Before anyone starts the whole 'you should just be honest' moral thing on me - I'm not planning on misleading anybody (or bank) I just want to know for curiousity's sake.

Also (and this one I will be putting to use) is there a certain limit at which it becomes more difficult to borrow the money? i.e. is it tiered like £500-1500 very easy, £1500-£3000 easy, £3000-£5000 medium, £5000-£7000 very hard to obtain.
Basically, with my current credit rating, say I was applying for a loan - would it be the case where like £4999 would be lent to me no problem but £5000 suddenly becomes difficult as it goes into a higher tier?

I'm probably doing a terrible job of explaining this but hopefully you get what I mean. I had a look around on the site and couldn't find the answer anywhere.

BadgerFace_2

I can't be sure, but I know in the past when I have applied for loans, it would seem your theory is true.

i.e. I have been approved in an 'upto £xxxx band'. The reason I say this is having applied for say £3000 and being approved, they have then said over the phone (pre-credit crunch!), was I sure there was nothing extra I needed, I had been approved for upto £7500...trying to tempt me into taking the money for a holiday, home improvements etc.

I guess this has a large part to play in why the banks are in this mess!

Tixy

HI

It will depend on how much debt/credit you already have and what your income is.

If you earn £100k and have £2500 existing credit available and a good credit rating it shouldn't make any difference whether you want to borrow £5000 or £7000.
But if you earn £20k and have £4500 existing credit available you are more likely to be accepted for a £5k loan than a £7k loan.

I don't think they look at tiers of lending as such, more as percentages in terms of your salary and existing commitments etc.

sonofsmallface

Is there anyway of knowing how much you could borrow beforehand? e.g. you check your credit score (which I still haven't done yet) then check it against something - maybe a webpage or some statistics so that you can then draw a rough conclusion of what you could borrow.
Actually, it's just that I'm worried that if I apply for an amount and the refuse then it'll really hurt my credit score; but admittedly this is all conjecture on my part. What actually happens if they refuse?
If you ask for say £7000 and they turn you down do they a) offer a lower amount instead or b) turn you down flat? and if it's b, does that then mean that it hurts your credit score and that if you were then to apply for a lower amount than you initially tried for, you'd still get turned down as you credit rating had just taken a hit?
In all honesty I still don't really understand the whole process and how credit rating affects things.

Tixy

http://www.moneysavingexpert.com/loans/credit-rating-credit-score
Might be worth reading the above and trying the credit checker tool.

Oh and don't pay an extra fee to check your credit 'score', you just need to check your actual credit report (via the free online trials or for £2 each)