Ex- Credit Analyst - Throw your Credit & Underwriting Q's at me.

Snaggles

Tatter wrote:

Hi Mike
I defulted on my orange phone bill due to not having enough cash coming in. I recived a settlement agreement through their collections agent which I paid in March 2005 and thought nothing more. I checked my credit file in August to find that this item is still there unpaid!! I contacted the Credit Expert Monitering Service who inturn contacted orange. I have now recived a letter from Credit Expert Monitering Service who say Orange deny that I have paid and the amount should remain on my file. I have also contacted the collections company but have failed to recive a reply. The only proof I have of payment is on my bank statement as they failed to send me a recipt.
Can you please help?

Many Thanks
Tatter

Hello Tatter

The first thing I would do would be to try and prove that the funds did indeed arrive with Orange, and didn't get sent to the wrong account number etc.

If you contact your bank, they will be able to give you the details of the sort code and account number of the account the payment was sent to, and any reference that was quoted. Armed with this information, I would contact Orange and give them the details. (Sometimes if, for example, an incorrect reference is quoted, your payment can sit floating around in an account, and Orange wont know who sent it, so therefore can't apply it to your account).

If the funds went to the right sortcode and account number, and the correct reference was quoted, Orange should be able to check that the funds were received. If there was an error, and the funds were sent to the wrong place for any reason, your bank should be able to advise you what can be done (in the majority of cases, money sent to the wrong place can be tracked down and returned to the person that sent it, even if it was their error).

Once you have found out exactly what happened to the payment you made, you will be in a much better position to get the default showing as settled on your file. (Although the settled default will continue to show for 6 years unfortunately).

Good luck!

Snaggles

dings wrote:

Hi Mike - just spotted this very informative thread of yours, and thought I'd give you a try.

I have a loan with Egg that I took out earlier this year (March) for £12k (current settlement figure £11.6k). Now I didn't borrow as much as I probably should have, and since had some expensive items to pay - heating system, honeymoon, big car services (twice - grrr!!)... anyway, i have overdraft and cc amounts again, and want to top-up my loan with Egg by around a similar amount.

I have a good credit history, no payments missed ever on anything. Salary £33k.

Affordability is no worry to me, however I'm slightly concerned that given the amount and the proximity to the original loan, they may refuse.

Your thoughts would be appreciated... not read through all posts on this thread, so apologies if you've responded to something similar before.

Cheers Dings

Hi Dings

On your salary of £33k, you would probably be looking at a maximum of around £20k (or possibly slightly more) on a loan, however different lenders assess using different criteria (and I've no personal experience of Egg, sorry).

It wasn't altogether clear from your post how much extra you were wanting to borrow - you said your settlement figure is approx £11.6k and you were wanting to top up your egg loan with a similar amount - so total loan of around £23k-ish? Sorry if I've completely misunderstood you.

If I was assessing this, my thoughts would be: Okay, you have a good credit history and good salary - the loan you are wanting is on the high side in relation to your income, so I would need to be sure that there was very good affordability for the loan (so I would look at what you were paying out in mortgage payments, childcare, maintenance, other creditor payments etc).

I would also be concerned that you have built up credit card and overdraft debt fairly quickly since you took out the current loan, so I would want to understand how the debt has been built up (and from what you said, it has mainly been on large, one-off things like home improvements (the heating system) and getting married, so this is better than having just spent it on general living costs etc).

I would also take into the account that you have, for the last few months, been servicing the existing loan, plus your credit card and overdraft, and the fact that restructuring your existing loan would reduce your outgoings. I would want to be sure that you are not relying on 'revolving credit' (ie using your overdraft and credit card to supplement your income because your finances are stretched due the current loan repayments). I would ideally want to see that you had been servicing your existing level of debt, without increasing the amount you owe, for 6 months, to ensure I could establish affordability.

So I suppose what I am saying is that whilst the loan would be on the large side (if I've understood what you wanted correctly), there ARE things in your favour that a judgemental lender would take into consideration. I'm not saying that they will definitely agree the loan for you - unfortunately they might just take the view that it's too much, too soon, but I feel it would be worth having a chat to them about it.

With a loan of that size in relation to your income though, they would need to feel pretty confident that you are not going to go out tomorrow and start spending on your overdraft/credit card again (if your overdraft/credit card are also with Egg, there is a possibility they might want to reduce your overdraft limit and reduce or close your credit card, to limit your overall unsecured borrowing facilities). Their concern would be that if you did then go and run up more debt, it would affect the affordability for their loan, and all they are interested in, at the end of the day, is that you are able to repay their loan, plus lots of interest to make them a lovely healthy profit!

Sorry I can't give you a definitive answer, however I hope this gives you a bit of insight into what a judgemental lender would be thinking.

Snaggles

INDIANNA73 wrote:

Hi Mike,

Hope you can help. My brother has been searching for a loan and has applied to a few companies. He was not happy with some of the interest rates and carried on applying. He is now being refused as he has too many searches on his credit file from applying for these loans. He has now been told that he must wait 6 months before re-appyling. Is there any way around this? The only solution we came up with was for him to accept one of the loans with a higher interest rate and then in 6 months time re-apply to one of the companies with a lower rate and use that loan to pay off the original one, but we are worried that he may not be accepted for the second application as he will already have a loan. Hope this makes sense to you.

Hello Indianna

Unfortunately the searches will show for 6 months whatever you do, so there is no real way round this I'm afraid. The problem with too many searches is that lenders will read this as being credit hungry or desperate (even if this isn't the case).

Does he really need to borrow the funds urgently? Could he not just wait 6 months and then re-apply? The reason I ask is that if he borrows the money now, at a higher rate, he will not only be paying more than necessary, but he also might then struggle to get a further loan because of the new loan he has in place. Also, if he does then manage to find a loan with a better interest rate, he may have to pay hefty penalties to repay the first loan early, so he would need to factor any early repayment penalties into any calculations about whether it's worth doing.

Just another thought, but has he approached the bank that he holds his main banking with? Because they might assess based on the account operation/banking history he has with them rather that just relying on credit scoring. They may not offer as competitive a rate as he would get shopping around though, but worth asking.

When he does start shopping around again, I would start the conversation by asking what the standard APR is for the amount he is wanting - then ask if then can give him an agreement in principal subject to a clear credit search (some WILL do this, some wont) - then they can give him a quote for indication purposes, and if it's a competitive rate, and he's interested, he could say 'Okay, do the search'. That way, he wont end up with lots of searches from companies who were never going to be able to be able to help anyway.

Hope this helps - I'm sure Mike will add any further thoughts he has if I've missed anything!

Snaggles

Hello Mike!!

Sorry I've not been around for a while, this morning sickness is really a pain - some days I can't even look at a computer screen because it makes me feel so ill.

I've answered a few questions, hope they're okay. I've left one or two as they're outside of my field really, and I don't want to just guess (so please don't be offended if I haven't answered your question).

I hope the new job is going well. I noticed you said you were training in Leeds a few weeks ago - wish I'd been feeling a bit less ill, I would have joined you for a lemonade hahaha!

Take care, Love Snaggles xx

sallyx

Hi there mike
I was wondering whether this might be a question that you can answer. I am thinking about going to CCCS and trying to get DMP. MY DH and I are seperating and unfortunately for me all our debts are in my name. I will not be able to afford to pay the payment amounts that I currently pay and wondered about taking a DMP out. I want to provide for my daughter in the future and have a goal to pay off debts save a deposit and buy a house but how will a DMP effect my already poor credit rating. Is it counted as a default or CCJ??

Thanks

dings

Snaggles

Thanks for your answer - and the level of detail.

I actually got declined by Egg for what I wanted, however they offered me an alternative arrangement. However, I decided to speak to my bank (Natwest), and they have agreed in principal, and I'm just waiting for the paperwork to come through.

A question I had was whether having been declined by Egg would this affect my chances with Natwest, bearing in mind NW have already "agreed in principal". A couple of people kindly responded saying that it was unlikely to affect it. Given your seeming expertise in the area, what are your thoughts....

Sorry to trouble you.

Thanks

Dings.

Snaggles

Hi Dings!

Lenders assess on different criteria, therefore it's quite possible that one would decline you, but another would accept you - the decline itself shouldn't have any bearing on another lenders decision. Hope this puts your mind at rest a bit.

An agreement in principle is usually subject to something....ie a credit search/ supporting documents (bank statements etc)/something else. Did they give you any indication of why it was an agreement in principle rather than an outright agreement?

PS - It's no trouble! And hope you manage to get the loan sorted.

dings

They said final checks, and remembering the conversation, possibly proof of ID - copy of passport or similar.

I'm guessing they'll run a credit check as well. As I say, my credit history is clean other than the egg "decline" of last week, and that's the only slight doubt i have - although it is a very slight one.

Thanks again.

Mike_St_Helens

Hi Guys...

I havent forgotten any of you.

With the new job.. and im still in Spain.. Ill be back with force next week. I promise to answer all.

Mike xx

Hope we are alñl well ! I am.. Bloody hell its hot here :beer:

Snaggles

Mike_St_Helens wrote:

Hi Guys...

I havent forgotten any of you.

With the new job.. and im still in Spain.. Ill be back with force next week. I promise to answer all.

Mike xx

Hope we are alñl well ! I am.. Bloody hell its hot here :beer:

Wondered where you were ! I must have missed you saying you were going to Spain - hope you have a lovely time, easy on the Sangria.....Oh what am I saying??? Have one for me lol!!!