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

Mike_St_Helens

Kaváfy wrote:

Hello!

Many thanks for this informative thread! I'm writing because I've now been refused two credit card applications in a row, something which has not happened before. I'm using the 0% shuffle method to borrow about 5500 pounds and I've got the debt divided between two cards. A while ago I applied for the GE 3% cashback card (to use for purchases of course) and was rejected, and now I've just applied for another 0% card (Stroud and Swindon I think) and have been rejected for that too. I've checked my credit report and I just can't see anything that might be causing this! Any ideas, anyone?

K.

The amount of searches so soon may be an issue... It depends on how fussy the lender is. Are you on the electoral roll, working, etc etc

samizdat

Mike St Helens/anyone,

When Intelligent Finance withdrew their Offset credit card, I ended up missing four payments on my account, a situation remedied in October 2005. I have just arranged for the final settlement of the account, which should show up on my file in December. (See this thread: http://forums.moneysavingexpert.com/showthread.html?t=190248 .)

I have read that three or more missed payments are regarded as "a default in practice" - see page 3 of the minutes of a meeting between the Competition Commission and Experian:
https://www.competition-commission.org.uk/inquiries/current/homecredit/staff_meeting_with_experian.pdf

I also know that I have a financial association with my wife through our joint mortgage.

My question is, given that the rest of my credit history and my wife's entire credit history are perfect, what are the chances of either me or her obtaining credit on standard terms and how will this evolve over the next few years? We are on the electoral roll, married, homeowners, not unduly burdened by debt (£19,000 unsecured on a combined income of > £100,000, split about equally, plus an affordable mortgage), and have an otherwise solid repayment record. I am employed full-time, my wife is self-employed.

Our need for credit is partly tactical, because I would like to convert personal loan debt into 0% or low life-of-balance credit card debt. However, in two years time, we will need to remortgage.

I am also concerned that missing four payments may be worse than an actual default because I have read that account history is preserved for six years from the time of settlement. In the case of a true default, I understand that it is erased from credit history after six years from the time of default, regardless of whether the account has been settled. In the case of a quasi-default (three or more missed payments), I am wondering whether the event will stay on file for longer, i.e. for six years from the time of settlement of the account.

On moneysavingexpert.com, their credit card search facility asks whther a default is more than three years in the past. This suggests there may be an ageing process that will reduce the impact of the default. Is there any widespread practice among debt issuers in this respect? Also, is it a good idea to issue a notice of correction to explain the circumstances of the missed payments, or will this be counterproductive? I am concerned any such notice might itself trigger rejection by at least some providers because it creates a "non-standard" profile.

Obviously, I could just try some credit applications but I am reluctant to do this without more specific knowledge of the attitude of particular institutions to this type of scenario and am unsure whether my wife would stand a better chance (no default but linked to me, self-employed and with a shorter electoral roll history and more past addresses).

MABLE

Mike,

I have checked and I have had about 15 credit searches in the last 12 months. Also my available credit on my 12 cards is about 90k and owe 2.9k for my car. I am with LLoyds Bank and my credit risk indicator has gone up to 9, which is the worst possible rating to have. Also when I have done a loan quotation on line they are quoting me 24.9 percent. and there typical rate 6.4. I have spoken to my account manager and can see no reason why my rate should be so high. I have seen my credit files and there is nothing negative and I have never missed a payment. Would you suggest I perhaps close some of my credit cards down or could it be the searches doing the damage.
I only keep the cards open for a any special offers that may come through. Any help appreciated.

50_percent

Dear Mike,
Thanks so much for your advice yesterday. I am drafting an incredibly stern letter to HSBC for not putting a notice of satisfaction on my file, and some good news - I found out this morning that I've been accepted for the mortgage.
Thanks again!!! x-x-x

claire999

Mike it seems your the paerson to ask regarding credit issues, i currently have a 84£ default which is satisfied on my credit file from Avon - Mail order caterloge and i got it in june 06, i would ike to know that if i clear all my curent credit cards £2500 and car finance £1900, id be left with a managed loan through hsbc for £15000, in june 07 i will like to go for a credit cards to rebuild by credit as i presume its poor - will this default/managed loan affect things also if later that year could i go for a mortgage?

Mike_St_Helens

claire999 wrote:

Mike it seems your the paerson to ask regarding credit issues, i currently have a 84£ default which is satisfied on my credit file from Avon - Mail order caterloge and i got it in june 06, i would ike to know that if i clear all my curent credit cards £2500 and car finance £1900, id be left with a managed loan through hsbc for £15000, in june 07 i will like to go for a credit cards to rebuild by credit as i presume its poor - will this default/managed loan affect things also if later that year could i go for a mortgage?

Hiya..

What do you mean by managed loan. Is there only the default thats a strike on your file ?

Mike_St_Helens

MABLE wrote:

Mike,

I have checked and I have had about 15 credit searches in the last 12 months. Also my available credit on my 12 cards is about 90k and owe 2.9k for my car. I am with LLoyds Bank and my credit risk indicator has gone up to 9, which is the worst possible rating to have. Also when I have done a loan quotation on line they are quoting me 24.9 percent. and there typical rate 6.4. I have spoken to my account manager and can see no reason why my rate should be so high. I have seen my credit files and there is nothing negative and I have never missed a payment. Would you suggest I perhaps close some of my credit cards down or could it be the searches doing the damage.
I only keep the cards open for a any special offers that may come through. Any help appreciated.

Wow.. There must be something there on your credit file? Have you seen a copy latley ?

Mike_St_Helens

samizdat wrote:

Mike St Helens/anyone,

When Intelligent Finance withdrew their Offset credit card, I ended up missing four payments on my account, a situation remedied in October 2005. I have just arranged for the final settlement of the account, which should show up on my file in December. (See this thread: http://forums.moneysavingexpert.com/showthread.html?t=190248 .)

I have read that three or more missed payments are regarded as "a default in practice" - see page 3 of the minutes of a meeting between the Competition Commission and Experian:
https://www.competition-commission.org.uk/inquiries/current/homecredit/staff_meeting_with_experian.pdf

I also know that I have a financial association with my wife through our joint mortgage.

My question is, given that the rest of my credit history and my wife's entire credit history are perfect, what are the chances of either me or her obtaining credit on standard terms and how will this evolve over the next few years? We are on the electoral roll, married, homeowners, not unduly burdened by debt (£19,000 unsecured on a combined income of > £100,000, split about equally, plus an affordable mortgage), and have an otherwise solid repayment record. I am employed full-time, my wife is self-employed.

Our need for credit is partly tactical, because I would like to convert personal loan debt into 0% or low life-of-balance credit card debt. However, in two years time, we will need to remortgage.

I am also concerned that missing four payments may be worse than an actual default because I have read that account history is preserved for six years from the time of settlement. In the case of a true default, I understand that it is erased from credit history after six years from the time of default, regardless of whether the account has been settled. In the case of a quasi-default (three or more missed payments), I am wondering whether the event will stay on file for longer, i.e. for six years from the time of settlement of the account.

On moneysavingexpert.com, their credit card search facility asks whther a default is more than three years in the past. This suggests there may be an ageing process that will reduce the impact of the default. Is there any widespread practice among debt issuers in this respect? Also, is it a good idea to issue a notice of correction to explain the circumstances of the missed payments, or will this be counterproductive? I am concerned any such notice might itself trigger rejection by at least some providers because it creates a "non-standard" profile.

Obviously, I could just try some credit applications but I am reluctant to do this without more specific knowledge of the attitude of particular institutions to this type of scenario and am unsure whether my wife would stand a better chance (no default but linked to me, self-employed and with a shorter electoral roll history and more past addresses).

The default thing varys vastly on the lender. For example.. I would have approved someone with a default 3 years old that was satisfied and below £1k.. Other lenders wouldnt.. even in the same bank !

If it is s purley 'scoring only' lender, then it will affect your file for the whole 6 years its there... but natrually the older it is the less of an impact irt will have. You may also be approved for a number of cards, but the interest rate may be somewhat higher after any promo deals, Price based risk.

The industry standard for electoral roll is 3 years, as long as you have that then you should be fine anywhere... obviousley the longer the better. Also being self employed, unfortunatley does impact your score... In a roundabout way that is. But again, the longer you are self employed, the better.

claire999

mike thanks very much for your reply i can oly see the default as the main issue once the credit is paid off, it however says on my summery of the equifax report that i have no defaults ? the hsbc loan iis noted as a normal loan on my file but it is called a 'managed' loan by HSBC it was put to us as we were haveing problems which are all resolved and i am going to see if they will revert it bakc to a normal loan?

MABLE

Mike_St_Helens wrote:

Wow.. There must be something there on your credit file? Have you seen a copy latley ?

Hi Mike,
I have my Equifax and Experian online and there is nothing negative. All I can think of is because of the searches on my file and available credit. However cannot understand LLoyds would now risk me at a 9. I have an overdraft in total of £10,000 at my disposal and I very rarely use it. Also I have with them a £15,000 limit on their credit card but debt on that is zero.

As I said previously the only debt I have is for £2700 with Barclaycard a
2,9% life of the balance so very confused.