Getting a Loan with Lack of Credit History

horsechick

Hi,

My brother is attempting to get a loan for £5000 to get a car (instead of buying cheap cars which keep going wrong and costing him lots of time and money to fix).

He is 21 years old and on the electoral roll at my parents house. He has no credit card and has HSBCs standard current account. He has never taken out a loan before and to my knowledge has never gone over his overdraft limit.

He applied for a loan from Moneyback Bank and got refused due to a lack of credit history.

Any suggestions about where he could get a loan from? Im concerned that another refused application is going to cause him problems in the future.

Thank you for your help,

HorseChick

mparter

His bank should be his first port of call as it appears that their the only one's he has any financial "history" with. Decisions on lending aren't recorded on your credit file, just that a search was made. However, a lot of searches in a short space of time can affect his rating.

Dazza.mk_2

Unfortunately with a lack of credit history he is probably not going to get the best rates available (as shown by Moneyback Bank), best bet short-term is therefore likely to be HSBC as they will have a lot more history regarding account management etc.

Longer term he can look at increasing his credit history by 'careful' (pay off in full every month) use of storecards and credit builder specialist credit cards (Barclaycard Initial/Vanquis/ Cap One Classic) - although he shouldn't really think about this until he's got the loan sorted and he has been paying it off for 3 months +

That won't help this time around, but will mean he is in a stronger situation next time he needs to look for credit.