Rejected for Tesco loan - help/advice please!

sheilawasadiver

Hi all.
First time on the site but have followed the site and the forums for advice before. Grateful for any comments here on why I may have been rejected and/or what to do next.

I earn £27k, full time employed, private rental for 2 years (a rental for 1 year before that), have never missed any credit repayments (although I have debts amounting to approx £15k - 1 loan, 4 credit cards), on the electoral roll for past 4 years, bank with HSBC for 11 years, no CCJ's/charges, maybe a couple of credit card cash advances but generally my credit report is pretty spotless.

After seeing the rate advertised here, I recently applied for £14,999 for 5 years, 2 month payment break via Tesco Finance at 7.7% apr. I was expecting them to come back with a slightly higher APR but I was flat refused - which I found a little confusing. I wrote to Tesco's appeals officer, with my monthly budget example worked out to the penny - stating the amount of disposable income after bills. I had a letter back saying they would not reconsider - "Whilst we do not doubt your ability to repay the loan, unfortunately, your application did not meet our minimum credit score requirements..."

This concerns me somewhat as I didn't think I would have such a tough time getting a loan on the basis of a reasonable annual wage. I have looked at Santander but imagine I will get turned down again. Didn't really want to get one through HSBC as they only offered me 14.9% over the phone (plus there's the issue of lending from who I bank with). Failing that, an IVA seems a bit extreme. I'm not actually managing to chip into the credit cards with rising food,house etc costs so wanted a debt consolidation loan to help with that and make it more manageable.

Any ideas on what I should do? Not sure applying and getting rejected a couple of times is going to do my credit score any good.

Rossy.

Pretty simple

You've got 15k outstanding already - You're applying for 15k = 30k total debt

They have no way of ensuring you'll pay off your existing debts so they see it as 30k and with a 27k PA salary you've no chance

opinions4u

Tesco cherry pick their customers.

This is how they reduce their lending risk and offer a best buy interest rate.

I would hazard a guess that 85%+ of their customers are homeowners. You've also suggested that you're quite close to the edge financially, and credit card cash advances support this.

I think your best bet will be your own bank.

Take a look at the Debt-free Wannabe forum. Some great ideas on how to reduce your outgoings (and increase the impact you make on your debt reduction).

Good luck.

CLAPTON

you're seriously considering either a loan or an IVA?

and you rejected HSBC at 14.9%?

why is it an issue to borrrow from the bank you have an account with?

MFWannabe

Exactly as Rossy said; you have too much available credit already and you are asking for 15k more (as they see it).
Your best option is to post and soa on here using www.makesenseofcards.com

We can then offer advice where you make cutbacks to get this debt paid off; pleny of people on here have been/are in exactly the same situation
Also do not apply for any more loans; as there will be too many credit searches on your file.

Apples2

Why is it Payment Holidays appeal to people??

The payment may stop, but the interest piling on the debt doesn't.

It takes some strange budgeting where you receive a lump sum (15k in this case) then immeditely try to avoid the first payment (and second).

chesky369

............I'm not actually managing to chip into the credit cards with rising food,house etc costs so wanted a debt consolidation loan to help with that and make it more manageable......

You're living beyond your means which Tesco obviously cottoned onto immediately. Why should they lend to someone who will probably default in the not-too-distant future, when there are safer people to lend to out there?

You should address the debts you have already, rather than trying to disguise them.

sheilawasadiver

Thank you for your posts - much appreciated. As it was a refinancing loan to pay off existing debts I didn't think it would be classed as £15k additional credit. Thanks for clarifying and that explains a lot, erm, feel a little naive now Appreciate all the valid points made about payment breaks, living beyond means etc - I am trying to do this to reduce future borrowing/risk as there is very little room for me to contribute more to my cards (which is why I mentioned IVA - to try and lower interest & payments). Haven't rejected my bank on basis of 14.9% but thought that seemed rather high - they are advertising a lower rate via sites now so I should re-inquire.

I will check out the DebtFree Wannabee forum & Make Sense of Cards site - what is SOA, 'sign on anonymously'?

Thanks again all.

chesky369

It's Statement of Affairs - like a budget statement. If you go over onto the Debt-free wannabee board, I think one of the stickies has a template. Then you fill it in, post it on the boards and everyone pulls it to bits.

BeInTheKnow

Lenders are using clever techniques to calculate risk now days, they check current finance against available credit and % used on each account (cc/od/catalogues/store cards) and if your nearing 75%+ or constantly dipping into credit cards each month (over 75%) then this will have a major negative effect on your chances of obtaining credit....This is regardless of your reasons for obtaining further credit...Even if you state "debt consolodation".

But other factors would be used too. I you have made 3+ applications for credit in the last 3 months has a negative effect on you chances of obtaining further credit.

A zero or negative balances (like arranged overdrafts) in a current account over several months (balances ARE reported to Credit Reference Agencies).

3+ recently (last 3 months) Satisfied accounts beleive it or not has a negative effect on your credit rating.

UK Home landlines have positive effect when applying.

Include Employers details and contact numbers has positive effect when applying.

Finally...Stability. If you have moved around a bit. Moved more than once in the last 3-6 years. If so this is a huge risk to the lender.