When to reapply?

Claire_Bear

Hi all, I am looking to take out a loan for £5000 with my bank. I went into the branch to apply and was told that I'm currently not eligible to get one due to my overdraft (even though they told me I should apply for one in the first place, in order to clear my overdraft ), but I can always try again in a while. I was just wondering how long I should wait before reapplying, and if there's anything I can do in the meantime to increase my chances of being successful. Unfortunately there's no way I'll be able to clear any of my overdraft at the moment, but in the past few months I have had unauthorised overdraft fees, could this be what is causing the loan to be declined?

Thanks in advance for any advice

RichGold

Its probably your overdraft that hampering your application. The bank staff will tell you to apply for a loan with absolutely no idea of your likely approval, they are just trying to sell bank products, they don't care if you're refused or not.

More info needed to be sure though.

How much available credit do you have?
What are your earnings?
What does your credit file say?
Any defaults? CCJ's? missed payments? outstanding debt?
How big is your overdraft?

I certainly wouldn't re-apply until your overdraft is gone.

Claire_Bear

I've just moved to a new job which is 24 hours per week at £6 per hour. Will banks take other income such as partner's earnings into account as I'm aware I'm not earning a lot by myself at the moment.

I've never checked my credit so not sure what my file says My overdraft is £2600. I don't have any credit cards or store cards or anything, my only available credit is my overdraft.

My outstanding debt is a payday loan (no need to tell me how utterly stupid that idea was), I've been paying off £100 per month from this plus my overdraft fee which is why I'd like to apply for a bank loan, hopefully to pay these off and reduce my monthly payments a little. I'm also behind on council tax but in the process of arranging a payment plan for this. I also have some missed payments on my record with Virgin Media from the last house I lived in, not sure if that'll count against me too That's been cleared now though.

RichGold

You have in income of around £7,400, you're £2600 into your overdraft and have a payday loan spiral that you can't clear, for those reasons alone you will not get a loan for £5 grand.
If they were to lend that amount to you, you would have £7600 of debt which is more than your annual income, and that's without taking into account the payday loan & council tax arrears. Lenders only usualy allow you to have credit amounting to half your annual income. You already pretty much have that so its a no go.

They wont take into account your partners income unless you apply for a joint loan, which if he has good credit and the ability to borrow should he need it, I would advise against doing as once you're financially associated you will pull down his ability to get credit and probably still be refused.

Claire_Bear

Thanks for explaining it, it's frustrating to be turned down and have no idea why. Even though I would be using the loan for debt consolidation, leaving myself just £5000 in debt once I'd used it to clear off my overdraft, payday loan and council tax arrears, I'm guessing they wouldn't take this into account (or just not take my word for it?). But like you said, it would still amount to more than half of my annual income. :think: Would I be more likely to be approved for a smaller loan of around £2000 or is it just an outright no until I can sort out my overdraft etc?

RichGold

I would think a loan is out of reach at the moment. They wont consider what the loan is for, they'll just refuse it. The fact you have a payday loan that you cant clear is also doing you damage.

No-one will be in a rush to lend you money when you've shown you cant get out of your overdraft and payday loan. They'll view that as you're living beyond your means.

Don't borrow more from payday lenders, this could be a turning point for you, but it could all still go very wrong from here if you aren't careful.

Claire_Bear

I see, thanks again for your help I definitely won't be making the mistake of getting a payday loan again, worst thing I ever did! I'll just have to cross my fingers for the Euromillions tonight