need advice about a new loan

pop91

Hello,

I'm writing as I would like some info/direction on how to apply for a loan.


My credit report (through Experian) has come up with a score of Fair (albeit at the top end) but still, I thought it would be Good if not Excellent and now I'm not sure what my chances of getting a loan (looking at around £15000) will be.

My circumstances:
-I have been at the same address for more than 5 years.
-I have 4 credit cards, two store accounts (hardly used) and an overdraft.
-I'm employed full time with a very good salary.
-I'm never late with credit card or store account payments and always pay a lot more than the minimum. Always!
-I tried to apply for a loan last year but it was declined (by 3-4 different banks - my bank does not offer loans unfortunately plus my overdraft is maxed up). These failed attempts do not appear on my current credit report.
-My only recent decline was in November 2010 (I foolishly went for one of those "pre-approved" credit cards! what a joke!!)

I used Experian's "find a loan to your circumstances" solution but it didn't really return any promising results, just that someone would call me back from a company I've never heard of before (a loan broker, to be avoided as I understand, right?)

I would like to apply for a loan after November after that search disappears from the credit history [they should really drop after 6 months max:):) shouldn't they?]

I would really appreciate any help anyone can offer, and also, is there a professional service I can pay and get advice on this subject by the way?

thanks!

Tixy

No professional service you can pay for no. There may be companies that advertise that sort of thing, but steer clear.

How much total credit (used and unused) across the cards, store cards and overdraft?
How much of a loan did you apply for/want?
How much do you earn?

Are you on the electoral roll?

The Nov 10 single search won't have an impact on whether you would be accepted now or not.

stephane_2

If your overdraft is always maxed up then that is a real issue...it just show bad money management to a potential lender.

pop91

the loan will be to consolidate mainly, so £15000 sort of balances out.

I understand about the overdraft but there's not much I can do about that to be honest, unless I stop paying the credit cards (not huge amounts on the credit cards but they're maxed out too although I pay a lot into them every month, which I then use up by the end of the month).

Salary is £34500

I'm surprised the decline from Nov 2010 won't matter? I thought it was the worst thing on my credit report... I still don't understand why my total credit score isn't higher... ok I have the debt which isn't going away but I manage it well monthly, no defaults or late payments or anything...

pop91

yes I'm on the electoral register!

Apples2

Your current debt is almost 50% of your Salary.

By asking for another £15k you will be seen to be almost your entire years Salary in debt (they will add the new loan to your existing debt irrespective of it's purpose)

the above alone is enough to turn lenders away, now add the fact that you regularly use the banks money to buy food with (O/D) and you look an even greater risk.

It would be a minor miracle for you to be accepted for further borrowing.

stephane_2

What is your total outstanding on all your credit cards & store cards?
What is your overdraft limit?

stephane_2

I agree with the above, if your current debt level is about £15000 and you are asking for another £15000 and on a salary of £34000 then your chances are almost nil. Any lenders will see that you want to add another 15k to your current debt level irrespective if you are planning to pay your debt with it. You seriously need to look at your finance, your overdraft is maxed up every single month, you then pay some of your credit cards balance to use it again. You are within a vicious circle and unless your can set yourself the goal of reducing gradually your overdraft and stop spending on the credit cards, then your situation will not improve in the near future.

pop91

thanks everyone!


so basically the only way to be approved for a loan is to prove I don't need it ...
I thought if the loan amount and the current debt is the same, and the reason for wanting the loan is to pay off the debt that shows that I can manage it... hmm... not sure what to do now.

Apples2

pop91 wrote: »

so basically the only way to be approved for a loan is to prove I don't need it ...
.

Not quite, the only way to be approved for a loan is to prove you can repay it.

Whatever your loan payments WOULD be, is the amount you should be stuffing in a savings account each month.

Tixy

pop91 wrote: »

I thought if the loan amount and the current debt is the same, and the reason for wanting the loan is to pay off the debt that shows that I can manage it... hmm... not sure what to do now.

Sadly not - it shows you can manage £15k worth of debt, but doesn't show you can manage repayments on £30k worth of debt.

How much do you owe on each of the 4 cards and what are the APRs on each? and on the overdraft?

You might want to take a look at the snowballing option. First work out a strict budget to maximise the amount you can afford for debt repayments - then do a snowball to make sure you pay off the debts in the most cost effective order - http://www.whatsthecost.com/snowball.aspx

If you are struggling to make more than mininum payments pop over over to the debt free wannabe board for some tips on budgeting and reducing outgoings/getting things cheaper - to try to free up more cash each month for debt repayments.