Tesco Loan Application

Dawalka

Hi all,

I am just after some helpful advice really, nothing I am going to hold anyone too, so all input will be welcome!

Let me give you our details:

I myself have never been too good with money, in fact things got so out of control and I did not then know that sites like this and help were available that I began to struggle to pay my debts, luckily just in time I found MSE, and all the great helpers, and I am now well into my second year of a DMP that I am managing successfully. I am now MUCH better with my money!

My wife is and always has been great with her money, never into her overdraft, pays off credit cards in full every month and is generally very sensible! She has one loan with Sainsburys that she used to contribute to our wedding and honeymoon, she has been paying back for 4 months (after an initial 2 month payment break) and again has not missed a payment.

Now for our situation:

My wife is looking into getting a newer (well few years old 2nd hand!) larger car as she has had hers for almost 7 years now. Rather than apply for Fords own finance at their high interest rates she was looking into getting a second loan to pay off the Sainsburys loan (we rang and got what our settlement amount would be) and get the car.

We first checked with Sainsburys about doing it through them, but as the underwritters want to see 6 months payments, and we only had 4, we were told we would not get it.

So what do you do when Sainsburys do not have what you want? Go to Tesco! We applied online on Sunday and got a letter today saying we do not meet its requirements. We will send for our Equifax report to see whats on it, but I just wanted to see if you think this decision was based upon a purely computer generated "not matching the score needed" report, and if it is worth appealing the decision (based upon the info about my Wife I have given above.

My worry is her low score was based on us having a joint "bills" account (this has no overdraft, is always in credit, and is used purely for DDs and standing orders) that is linked to me. All our other finances (including my debts) are ours and ours alone.

As the loan is for her and her alone (I do not even drive!) could we contest the decision based on her good record of payments and general steady financial background? Or will some one at Tesco already have been though the application with a fine tooth comb at the initial application stage?

I hope this all makes sense, sorry for going on so long, we are just anxious to get the new car before the VAT goes up in Jan, so would like a decision ASAP, but if its no worth appealing then we will need to have a rethink on what car she gets.

Many thanks,

Lee

Hax

There will be lots of factors included and more information would be required such as:

What is your wife's salary?
How long has she been in her current job?
How long has she lived at her current address and is she on the electoral register?
What credit cards/catalogues does she have? What are their credit limits and what are the balances?
What other debts does she have?

There may be other stuff too - but that should help to get things started

Hax

Sorry, I should have also said that if you have any joint financial products, then you will have a financial link created on your credit records meaning that when she applies for credit, then your record will be search too. Not quite sure as to the impact your credit record will have on her credit applications.

Dawalka

Thanks Hax,

we have a mortgage and the joint account together, so I suspect we are linked. Even so I think that she has quite good grounds to appeal, as the loan is for her, nothing to do with me.

She is a Teacher on £36K, been in her job for about 6 years, has a Barclaycard (1000 limit) and Tesco card (400 limit), both with 0 balance (as she pays off in full every month). No debts other than half the 113K mortgage. We have been at our (1st) home for a little over 18 months now, but we declared this and our old address on the application.

Thanks for all your help, based on this do you think we have grounds to appeal?

Thanks,

Lee

Hax

From what little I know, it doesn't look like she has anything bad with her credit record and her available credit and outstanding should be perfectly fine for taking out a modest loan. What amount was she looking for? It seems to be the general rule that lenders are unwilling to extend a line of credit that would exceed 50% of a person's salary. One thing you have missed out from above is the amount of the existing Sainsbury's loan.

How long as she had her own credit cards? I ask as her limits seem quite small - as if she is only just starting out with them. If this is the case, then she may not have a long enough credit history to satisfy the lender.

Dawalka

Again thanks Hax.

Not sure why the limits are so low, she has had Tesco one for about a year, and Barclay Card for approx 3.5 years. The loan amount (including early fees) we wish to pay off is approx 6.7K and the remaining loan amount for car will be about 8K, so looking at around a 15K loan.

We will ring Tesco to discuss before lodging an official appeal I think.

Hax

A £15K loan when added to existing £6.7K loan would mean that she would effectively have £21.7K of debt. Whilst you have every intention of using some of the new loan to clear the old, the lender will not see it that way and they have no guarantee that this will happen. And when you add in the £1.4K of available credit card debt that could be run up, it may just be that they don't think that ~£23K is within your wife's means with it being well above the "magic" 50% mark.

It sounds harsh as you know that the existing loan will be wiped out, but unfortunately, it's all about how the lender views their exposure and the risk of them not seeing their money again

zppp

What was the reason for the decline on the application? They use the same computer and application system when they were a joint venture with RBS. Therefore it would have come up with the specific decline reason at the end of the app, i.e. credit scoring, affordability adverse data etc?

Dawalka

Hi zppp,

She was not immediately rejected, but the letter today says they "as a responsible lender they are unable to helps us" It then says that the decision is based upon

"Information provided to us when you applied"
"Information provided to us by the credit reference agency, Equifax Plc."

It then goes on to say if after reading the leaflet you feel that they need to take further information into account then the appeal address is xxxxxxxxxxxxxx and the number is xxxxxxxxxxxxxxxxxxxxxx

Dawalka

Hax wrote: »

A £15K loan when added to existing £6.7K loan would mean that she would effectively have £12.7K of debt. Whilst you have every intention of using some of the new loan to clear the old, the lender will not see it that way and they have no guarantee that this will happen. And when you add in the £1.4K of available credit card debt that could be run up, it may just be that they don't think that ~£23K is within your wife's means with it being well above the "magic" 50% mark.

It sounds harsh as you know that the existing loan will be wiped out, but unfortunately, it's all about how the lender views their exposure and the risk of them not seeing their money again

I get what you are saying Hax, its something I did not think about and is a good reason. Based on this I think the best thing is to have a chat with them and then write a letter detailing my Wifes excellent record with money

Hax

Just read my last post that you quoted and noticed that I'd mis-typed changed 21.7K as 12.7K - doh!

Glad it made sense though. Good luck