Excellent credit rating but declined a loan

bobcoates

Today I've been declined a loan by a major DIY chain and I/they have no idea why.
Went in to buy a new kitchen and didn't want a loan but they have a 0% interest for 24 months offer on. Tried the "how much will you knock off for paying cash". No joy! You pay exactly the same amount if you pay the full price cash up front or take out a 24 month loan.
So, might as well go for the loan! But then have to go through the labourious digging out of bank statements, pay slips, proof of salary and such like, filling out big forms, but when it come to the crunch "CREDIT DECLINED!" says the screen.

Financial arm of the company won't tell their salesperson why they've declined the loan. He's seen my payslips and bank statements and can't understand what the problem is. It's only for around £5k.

As soon as I get home it's get my credit report from Experian.
I've got 4 credit cards that I've had forever, always paid off in full, in time and phone contracts likewise. Couple of queries and not much else. £25k of available credit on cards etc and only about £1k owing, already paid off in full. Lived at same address for 30 years (always on electoral roll), same employer for 12. Mortgage paid off. End result, credit rating of 999! Wonderful.
So can anyone tell me therefore why they would decline credit to buy something from them? Also, can I force them to tell me, as curiosity is getting the better of me.

The story does have a happy ending though. The manager, seeing what was going on and that a sale was slipping away from their grasp, came over and asked me if I was able to pay the full amount by credit card, because if I could, he'd give me a £300 discount. My credit card's never come out of my pocket so fast! So I got what I went in for, discount for paying in full and no credit.

But the "why wouldn't they give me credit" bit still irks me.

CHR15

Maybe because you already have 25k of available credit which you could ramp up to in no time.

iolanthe07

I agree with CHRI5 - it will be the huge amount of available credit, even though you're not using much of it.

fozmcfc

As per the other posts could well be your credit/income ratio. I.E. you already have a lot of credit available to you compared to your wages.

One other thing the score of 999 means nothing to lenders, there are numerous posts around here of people refused credit despite having a 999 score. The score is produced by Experian, it isn't in any way taken into account by lenders and it doesn't take fully into account your situation, only what Experian know about you and what your credit report with them (there a 3 seperate credit reference agencies) contains.

Do a search for Experian 999 and see all the can't get credit posts.

bobcoates

Hi Guys,

Thanks for the replies so far. It's something I hadn't considered. Is £25k a lot? Suppose it depends on your circumstances.

Could it be that they can see I don't really need the credit, I can afford to put the whole lot on a card, so it saves the money the credit costs them and they still get a sale?
If that's the way they are thinking, it didn't work. They nearly lost a sale and only recovered it by offering a substantial discount.
If they'd explained to me that's why, I could have accepted it, but to just clam up and refuse to tell me is a bit of a PR disaster as far as I can see.

Would a long term solution to prevent this again (not that I'm likely to do this again) be to close some of my credit cards.
I only really need two I suppose. (One is not enough as I've had so many occassions when cards are blocked due to "unusual spending patterns".)

I still need to know though if they are legally obliged to tell me why I was refused.
The salespersons screen told him to print out a leaflet and give it to me, which he did.
The leaflet says that they will tell me why if I ask. So I asked, but when he rang, they refused to say.

~Brock~

There is no legal obligation to disclose the exact reason for refusing credit, which makes perfect sense if you consider that once this info is in the public domain then it is at risk of being manipulated by fraudsters and those hungry for credit but who cannot handle it.

The stock response is the generic line 'unfortunately you have failed to meet our acceptance criteria'. From 1 Feb 2011 there will also be a legal obligation to provide you with details of any credit reference agency who was consulted as part of the decision making process, but this still does not give you the exact reason.

Also, the financial services part of the DIY chain may not even be the same company - many are actually run by separate lenders but are branded to match the name of the DIY chain in question. In any case, there will definitely be no relationship between the lending part of the business and the store itself, so they would care not a jot if a £5k sale was at stake - wouldn't even form 1% of their decision making process.

Pleased you got a good result in the end though.

opinions4u

They nearly lost a sale and only recovered it by offering a substantial discount.

So somebody buying with "0%" credit pays more than somebody paying via other means.

Good for you!

But I'd be pretty sure that there's a Consumer Credit Act breach going on there!

t508

The reality is that they wont tell you why you failed because in most lending companies they wont know as the computer makes the decision.

credit ratings are only a samll part of some lenders decision making, terms of job etc can all be counted in different ways.

The manger probably got involved and offered the discount because he will ahve realised that the company would not have received the 5k from the finance house anyway, they only get a reduced amount from the finance house effectivly meaning that the shop pays the interest for you.