Turned down for a HSBC loan

tonytone_2

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I am an existing HSBC customer with an existing loan account.
I wanted to take out a loan for a used car purchase, but after reading about how difficult it is to get credit nowadays I decided to check my credit rating before applying.
So I paid my £15 this morning and I was quite pleased to see that Equifax rate my credit as "Excellent". So given, straight after receiving this I decided to apply for a total loan of £15,000. This would be £5,000 to consolidate my existing loan and £10,000 for the car.

First of all, I checked using HSBC's loan calculator how much the monthly payments would be. It worked out at something like £290 a month over 60 months at 7.5% APR. I started to apply for the loan online, but I was offered 15.9% APR. So I decided to give them a call.
Over the phone they offered me 14.9%. I asked why I wasn't being offered the 7.5% as my credit rating was classed as excellent. The guy on the phone said "the 7.5% is rarely offered". So the rate they advertise is actually pretty misleading.

Anyway, so he processes my loan, including an affordability check, which I passed, but then when the application is made they decline the loan.

I asked why, and was told it was down to either credit rating or affordability!

"But I've passed the affordability check, and according to Equifax, my credit rating is excellent" I offered. The guy simply replied "Yes that's very odd. We can only see the main reason why you were turned down, a letter will arrive in the post explaining more".

So given the above, does anyone have any suggestions as to why I would be declined? I'm very confused!

Many thanks in advance!

CLAPTON

what do you earn

zppp

tonytone wrote: »

First of all, I checked using HSBC's loan calculator how much the monthly payments would be. It worked out at something like £290 a month over 60 months at 7.5% APR. I started to apply for the loan online, but I was offered 15.9% APR. So I decided to give them a call.
Over the phone they offered me 14.9%. I asked why I wasn't being offered the 7.5% as my credit rating was classed as excellent. The guy on the phone said "the 7.5% is rarely offered". So the rate they advertise is actually pretty misleading.

Typical APR has to be offered to at least 50% of applicants for the advertised 7.5% rate. This is under the consumer credit directive, and is checked by the ASA and the OFT. The guy you spoke to on the phone didn't know what he was talking about.

Your rate increased because of risk based pricing. Something has made them deem you a higher risk profile, which has altered your rate.

tonytone_2

CLAPTON wrote: »

what do you earn

£62,500

Zipp wrote:

Typical APR has to be offered to at least 50% of applicants for the advertised 7.5% rate. This is under the consumer credit directive, and is checked by the ASA and the OFT. The guy you spoke to on the phone didn't know what he was talking about.

Your rate increased because of risk based pricing. Something has made them deem you a higher risk profile, which has altered your rate.

I could fully understand that if it wasn't for the fact that my Equifax report gave me an excellent rating. If that doesn't put me in the 50% that should get the 7.5% APR, then what does? Does Alan Sugar apply for 50% of all the loans that HSBC give?

Interestingly, the guy said that if I'd applied last December, I would have been offered 7.5% as it was a "special offer" but he could only offer me the 14.9% now.

steve1980

The bloke at HSBC really doesn't know what he's talking about.

The credit score really means nothing. It's down to the banks own lending criteria. You didn't meet their A**** credit rating but you did meet their B credit rating which means that they will offer you a loan but there will be certain conditions. ie higher rate of interest as you are classed as a risk for whatever reason.

tonytone_2

steve1980 wrote: »

The bloke at HSBC really doesn't know what he's talking about.

The credit score really means nothing. It's down to the banks own lending criteria. You didn't meet their A**** credit rating but you did meet their B credit rating which means that they will offer you a loan but there will be certain conditions. ie higher rate of interest as you are classed as a risk for whatever reason.

That's OK, I can understand that. What I don't get is if my rating is being classed excellent, but it's still lower than 50% of the applicants to HSBC, surely it makes the whole Equifax credit rating an absolute mockery, as more than 50% of all people (averaged out) will also have "excellent" ratings?

SnowTiger

tonytone wrote: »

That's OK, I can understand that. What I don't get is if my rating is being classed excellent, but it's still lower than 50% of the applicants to HSBC, surely it makes the whole Equifax credit rating an absolute mockery, as more than 50% of all people (averaged out) will also have "excellent" ratings?

Equifax don't lend money and, as far as I know, lenders don't see their rating of you during a credit check.

It's simply meant to be a guide. However the I've got an excellent credit score but no ones will lend me money issue comes up here quite a lot, suggesting it's pretty pointless.

Saints2011

You need to realise that having a Excellent score doesn't mean anything in the eyes of actual lenders you need to realise that excellent from Equifax,Experian & Call credit is excellent news to them at £15 a pop but for you is worthless. You need to look at the data your report shows

Enfieldian

KirbyBirch wrote: »

you need to realise that excellent from Equifax,Experian & Call credit is excellent news to them at £15 a pop but for you is worthless.

Best summing up of CRA's credit scores I have ever seen.

Bravo.

:T:T:T

CLAPTON

just to be sure
when you say you have an existing loan a/c does that mean you have a current loan with HSBC , if so how much
do you use your overdraft
what are your current total debts
do you have credit cards

Saints2011

Enfieldian wrote: »

Best summing up of CRA's credit scores I have ever seen.

Bravo.

:T:T:T

Haha thanks late night posting :rotfl: