999 Credit Score... Yet refused for loan!?

euphoria87

Hello all!

Im currently looking at consolidating a previous highier APR loan (15%) total remaining £7500

And my credit card which has a total of £700

Also i wanted a couple hundred £ to clear off my holiday payments remainder.

I was refused a loan of £8400 over 60 months on an APR of 7.5%

I was told to look at my credit report, i have done this and everything looks up to date and accurate, i have never missed a payment, had 4 credit cards over 4 years, 3 are now closed payments in full etc
Had another previous 2 loans, all cleared now and never missed any payments.

I checked my Experian Credit Rating and it come back as 999. Now im right in saying this is the highiest possible score?! why am i being refused a good APR rate? any ideas?

Tixy

Hi

There are lots of people being refused credit with 999 scores. Its because these scores you buy from the credit reference agencies only take into account your past credit history/conduct. They don't reflect a lot of other things that lenders consider (not least your level of salary compared to your debt). Most people on here would say don't waste your money buying the scores.

Usually when people want to consolidate the problem they have is the level of existing debts and credit they have. When a potential new lender looks at all your existing debts and available credit and then adds on the amount you want to borrow from them to calculate your maximum exposure they often then judge that you could not afford repayments on that level of debt.

You may say you want to consolidate but a potential lender cannot be certain you won't just go out and spend the money they lend to you so they always look at the worse case scenario. As a rough guide lenders seem to be giving out new credit that will take your total debts and available credit to much more than 50% of your income.

How much do you earn?
How much do you owe?
How much other unused credit do you have available currently?

euphoria87

Tixy wrote: »

How much do you earn?
How much do you owe?
How much other unused credit do you have available currently?

Well i earn £21K a year
after consolidation i would owe £8400?
My current credit card has a limit £750 (i reduced it last year from 3K limit)

43.33% so less than 50% ?

Im very confused by the whole thing, it would cut my outgoings on loans in half, but i cant seem to be accepted?

triticale

euphoria87 wrote: »

Well i earn £21K a year
after consolidation i would owe £8400?
My current credit card has a limit £750 (i reduced it last year from 3K limit)

43.33% so less than 50% ?

Im very confused by the whole thing, it would cut my outgoings on loans in half, but i cant seem to be accepted?

Unfortunately the lenders look at the debt you already have + the debt you want (they have no guarantee that you will use the new loan to pay off the old debts), which would work out at more like 80% of your salary.

Tixy

The problem is the new lender cannot make you use the money to pay off your other debts.

So to any potential lender your existing debt/credit (7500+750) and the new loan on top 8400 so a total exposure of £16650 against a salary of £21k. They will think you cannot afford the repayments on £16k debt on a salary of £21k.

yorkshire-lad

It doesn't work like that.
The lender would look at your current loan of £7500+£700 on the cc, plus the extra £8400 you want to take out.
That is 16k worth of debt compared to your 21k income.

The lender has no guarantee that you will consolidate.
The debt to income is way too high.

The chances of you getting a loan for another 8k are pretty slim.


EDIT: beaten twice...doh.

somethingcorporate

The 999 means nothing really, my credit score for you is 2 bob and a big apple so it is obvious why you got rejected (as per posts 4,5 & 6).

JasX

Perhaps we could have a sticky along the lines of:

"Before posting 'I have a credit score of xxx and was suprised by'.... Don't, read this and avoid making an idiot of yourself"

....just to point out what credit scores mean (nothing) and give pointers on what is actually important on a credit record.

euphoria87

its a massive shame, because i would pay off the previous loan and have alot more spare money to myself every month! I might speak to my bank who supply my current loan and credit card and see if they can do anything.

What would you guys suggest i do?
I have 2 years 11months left on my current loan, would you suggest i just simply bite the bullet and pay the remainder over the remaining time? Or take a highier APR consolidation loan over 5 years and save myself £50 a month?

Tixy

Chances are you won't get the higher rate APR consolidation loan for the very same reason. It will look like you cannot afford both loans again. And to be saving only £50 a month is it really worth it if you have to pay the money out for an extra 2years anyway?

You could try talking to your own bank that you have the debts with but they are unlikely to agree to any changes that will mean that they earn less money, its not in their interests to.

It sounds like you are struggling to meet you current commitments each month- is that right? if so then it might be worth heading over the debt free wannabe section and posting up a statement of affairs and asking for some advice to help you meet your current repayments.

Blitz01

euphoria87 wrote: »

Well i earn £21K a year
after consolidation i would owe £8400?
My current credit card has a limit £750 (i reduced it last year from 3K limit)

43.33% so less than 50% ?

Im very confused by the whole thing, it would cut my outgoings on loans in half, but i cant seem to be accepted?

I obviously have no idea about your living costs, but £21K is not a high salary these days to take on a £8K+ loan.
This is probably the area they are refusing you on.