Application for loan refused - WHY???

emmajfry74

My partner applied for a loan with Halifax who he has banked with over over 10 years.

He has a Credit card debt with them of £9k and wanted to consolidate this debt into a loan to pay less interest.

We checked Credit Expert/Experian and his credit score was 933 and his credit historuy was greenlighted all the way through with no late payments.

He was told by Halifax in the bracnh that he met the criteria of the minimum take home amount and he clearly has the disposable income every month to pay the laon comfortably (even with eh credit card repayment taken into account) but for reasons unknown, halifax had declined the loan.

He appealed against this to their underwriters (as even the branch staff could not understand why the loan was refused) and the underwriters replied, saying they had re-checked his application but they were rejecting it again, as he did not meet the qualifying criteria and to check his credit report (which was a joke as HE had sent a copy TO THEM - so we were well aware of what it said!!!!)

Has anyone else had this problem and know what the problem is?? Halifax have declined to tell us the EXACT reason why they rejected his application.

He has no other debts, is on the electoral register and is in a secure job with good-ish pay.

GemBlueTopaz1984

Hi OP,

It could be his debt to income ratio, if he already has 9k and was getting a consolidation loan then they still consider his exposure to be 18k (assuming the loan was for 9k also) he would need an income of at least 36K if he has no other commitments to support this. Before you say it, even though he plans to pay off the existing debt with the loan they still have to approach the loan app in the context that once paid off he could go out the next day and run up the cards to 9k again then he would owe 18k, so thats why they view it this way.

Gem

Dabooka

Also, the branch staff always say that to defuse the problem and point the blame elsewhere. Think about it, if they tell you the truth such as pointed out above (and often they'll be unaware as to the exact reasons anyway), you'll enagage them in an ultimately futile and pointless conversation /argument. It's far easier to shrug your shoulders and say you've no idea why it's been knocked back.

Experian_company_representative

The lender should be able to tell you the main reason. I don't think the explanation you got on the phone is sufficient. I suggest you write to them and ask them to provide as full an explanation as possible, citing that you've checked your Experian report and can't identify a problem. Hopefully they'll be able to shed some more light on this for you.

Just to clarify, the Experian Credit Score is just a guide for you, it is not a score lenders use. However, it certainly indicates you have a strong credit history.

James Jones

climbgirl

Experian_company_representative wrote: »

The lender should be able to tell you the main reason. I don't think the explanation you got on the phone is sufficient.

The vast majority of lenders won't give you the reason for why your credit card or loan application has been declined. They will say you didn't meet their lending critieria but they can't tell you what those criteria are for competition reasons.

emmajfry74

Thank you to all thoat replied for your help and advice - it is certainly a little bit clearer.

We were going to look at another bank to see if we could obtain the finance there, but was going to wait to see what Halifax replied before we did, in case we were refused on something easily corrected, but it looks like we may not get the loan elsewhere.

Halifax are being very uncooperative and so far after 2 letters and, as of this week, a Freedom of Information Act request - we are still none the wiser and they won't even acknowldge our letters, let alone reply and explain.

I can see the point about running up debt as soon as one is cleared - but with his credit hsitory and account history which Halifax can easily see - I am still taken back that they may have used this to reject his application as his credit history is spotless.

Experian_company_representative

climbgirl wrote: »

The vast majority of lenders won't give you the reason for why your credit card or loan application has been declined. They will say you didn't meet their lending critieria but they can't tell you what those criteria are for competition reasons.

No they have to be more specific than that. They should be able to tell you, for instance, whether you didn't get enough points on their credit scoring, or you owe too much on existing credit, or there's adverse data on your credit report, or your disposable income is too low, and so on. This is required by industry codes.

James Jones

climbgirl

Experian_company_representative wrote: »

No they have to be more specific than that. They should be able to tell you, for instance, whether you didn't get enough points on their credit scoring, or you owe too much on existing credit, or there's adverse data on your credit report, or your disposable income is too low, and so on. This is required by industry codes.

What are the industry codes please and is there someone you can lodge a complaint with if they don't comply? My experience and the experience of dozens of others who post on here is that they won't tell you anything at all as to why you've failed and cite competition issues around their lending criteria as the reason. I've tried on the phone and in writing, as have many other posters.

If they are breaking some kind of industry code it would be nice to know what that is and where we can report them!

ReadingTim

Is this a Halifax loan to pay off a Halifax credit card by any chance? If that's the case, they've simply rejected him because it's going to cost them money - the same money your partner is hoping to save!

Your partner's credit score and monthly disposable income clearly demonstrates that he can afford the credit card repayments, therefore why would any profit making organisation such as the Halifax want reduce the amount of money they recieve from him?!? Answer = None! The fact that they can't give you a straight answer means there's a conflict of interests between their loans arm vs their credit card arm, so they'll only cite reasons of 'commercial confidence'

In this case, and if his credit rating is that good (and can take the hit from another credit search / loan application) would be to try another provider that's unreleated to the Halifax, as he'll be a new customer to them. However, he will run the risk of being seen as having an £18k exposure, as per GemblueTopaz1984's post above.

Experian_company_representative

It's in the Lending Code: http://www.lendingstandardsboard.org.uk/thecode.html , specifically section 48 on page 9. The Guide to Credit Scoring mentioned is here: http://www.bba.org.uk/policy/article/guide-to-credit-scoring/self-regulation/ and you'll see the guidance on communicating decline decisions about five pages in I think.

Although these are voluntary codes, the industry has committed to them and adherence is monitored by the Lending Code Standards Board. If you make an official complaint about a code violation to the lender in question and aren't happy with the response, you can ask the Financial Ombudsman Service to look at it.

James Jones

Experian_company_representative

Ha, the revised Lending Code has JUST been published. The paragraphs covering credit refusal are now in the Credit Assessments section on page 11.

James Jones