First time Loan Applicant - Advice!

darkvader

Hi All,

So I'm looking to pursue my MBA next Sept and in order to do I most definitely need to secure a loan. The obvious option is the NatWest MBA loan and if not, then approach my bank or 5 years, HSBC and discuss options.

Now my main question is this. I had looked at my credit report almost a year back and there were 2 defaults - one for £35 with 3 Mobile and another for £75 with O2. I have cleared the one with O2 but not 3 Mobile. Apart from this, my credit report was spotless.

The report has a lot of details - my work has made me move homes 3 times over 5 years, I have 2 credit cards, and many direct debits for cable, broadband, existing mobile connections, charities, flat rent etc but no defaults on these

My question is if Natwest or HSBC will reject me straight up for my 2 defaults. Though I cleared the £75 I am not sure they have removed it off my record. So, whether there's 1 or 2 defaults on my report, will it affect my application for a loan?

I am looking for approx £30k - most professional study loans dont exist anymore and NatWest is the only one for MBA. I dont even mind a personal loan if possible

Any advice or guidance is appreciated
Darkvader

Enfieldian

Defaults remain on the record for 6 years from the date of the default if I remember clearly.

For a £30k loan you need to be earning some serious money though, what is your annual income?

darkvader

Annual income is £43k and probably slightly more when I go for the loan.
The Natwest MBA loan gives
1. 100% of MBA tuition fees plus
2. Living and maintenance costs upto 2/3rds of previous salary earned just before starting the full time MBA which is my case is about £28k

So, if the course fee is £24k, and I want living expenses for 12 months at £15k, the total is £39k. If the 2 mobile payment defaults are not a concern, then securing the loan amount will not be an issue as the Natwest MBA loan gives based on the actual course fee.

If not Natwest for MBA, then I shall ask for a personal loan from either Natwest or HSBC where my income will play a big part BUT my main concern is I will not be eligible in the first place for ANY loan because

1. I dont own a home and changed cities 3 times in the last 5 years
2. The 2 defaults - does the default amount make any difference?

Any advice or experience if I have a chance of getting the loan approved?
Thank you
Darkvader

CapJ

darkvader wrote: »

Annual income is £43k and probably slightly more when I go for the loan.
The Natwest MBA loan gives
1. 100% of MBA tuition fees plus
2. Living and maintenance costs upto 2/3rds of previous salary earned just before starting the full time MBA which is my case is about £28k

So, if the course fee is £24k, and I want living expenses for 12 months at £15k, the total is £39k. If the 2 mobile payment defaults are not a concern, then securing the loan amount will not be an issue as the Natwest MBA loan gives based on the actual course fee.

If not Natwest for MBA, then I shall ask for a personal loan from either Natwest or HSBC where my income will play a big part BUT my main concern is I will not be eligible in the first place for ANY loan because

1. I dont own a home and changed cities 3 times in the last 5 years
2. The 2 defaults - does the default amount make any difference?

Any advice or experience if I have a chance of getting the loan approved?
Thank you
Darkvader

Some lenders apply an amount criteria to the default, so it's possible that as they are under £100 you won't be rejected. My advice is to settle the defaults and then try.

darkvader

The bigger amount of £75 with O2 was cleared earlier this year....only the £30 with 3 Mobile is left.

However, if the default remains on your credit report for 6 years, does paying it off really help? The amount is minuscule and I never thought £100 would one day be a major hurdle

I need to do a lot of prep work, answer the GMAT, plan part funding, apply to colleges, sort out references, send in applications etc but even if I get into the top colleges with part scholarship, if financing the course is next to impossible then there is no point in doing any of this in the first place!!!

This is my main concern - is there anyway of asking the banks if I will get the loans or not beforehand?

Thanks
Darkvader

Enfieldian

I have checked and defaults stay on file for 6 years, even if they are settled in the meantime.

There is a site which recommends challenging the original creditor with a CCA and if they are unable to provide one then the default should be removed, how true this is in practice, I don't know.

Info here:

http://www.learnmoney.co.uk/credit-file/remove_default_notice.html

darkvader

I did go through that thread and many others stating its not practical to expect a default to be removed.
I accept it is a default from my side and I am responsible. what irritates me is that many lenders dont bother to check how big the default was, dont ask the applicant about circumstances around the default and whether its £2 or £200 they just reject you.

What I am seeking from this forum is if anyone who has had a default of less than £100 was successful in securing the loan they want?

Thanks
Darkvader

CapJ

darkvader wrote: »

I did go through that thread and many others stating its not practical to expect a default to be removed.
I accept it is a default from my side and I am responsible. what irritates me is that many lenders dont bother to check how big the default was, dont ask the applicant about circumstances around the default and whether its £2 or £200 they just reject you.

What I am seeking from this forum is if anyone who has had a default of less than £100 was successful in securing the loan they want?

Thanks
Darkvader

I know for a fact that at least one lender ignores defaults less than £100. Sorry I can't comment more on this, but there is hope.

darkvader

Ok so I checked my £2 statutory Credit Report and these are the details

1. There is only a SINGLE Default on my file - This is for 3 Mobile and valued at £53
2. The default I had with O2 is now showing as Settled Status

There are no other issues with my Credit Report. Can I contact 3 Mobile, pay off the £53 and update the status to Settled?
And, is there any difference between a Settled and Default status when it comes to loans? I am guessing its good not to have any Default on my record and a Settled Status is much better?

Any pointers if the 2 settled accounts is fine and wont cause any issues?

Thanks
Darvkader

darkvader

I am only bumping this because based on the forum's advice and my chances, I need to prep for the GMAT and get the exam out of my way to then begin the application process.

My only questions are

1. I have 1 default - does it make sense to settle it and change the status to SETTLED?
2. Will banks treat me better with no defaults and 2 settled statuses on my credit report? The total default amount will be less than £130 and they are all Mobile Contract related. No other issues over the past 6 years

Please advice as I am slowly but surely running out of time!!!

Thanks
Darkvader

Enfieldian

Sorry to tell you this but you have 2 defaults on your file.

Settled or not they are still classified as defaults, similar to CCJs.