Supposedly good rating, yet declined by Northern Rock

dnamurphy

Hi everyone,

First post, so a happy New Year to everyone reading! :beer: I'm looking to take out an unsecured loan (~£4500) for a car so I applied to Northern Rock today over the phone. After giving over all my details, they rejected my application. The woman I spoke to said it wasn't due to my credit history, which was fine, just that they don't loan to people with my profile.

Not sure what that means exactly, but some background :

I'm a postgrad student, which means I now have a salary (of sorts) that amounts to just under 17k gross. I have a few credit cards, but no store cards etc. I decided to take a look at my credit profile etc, and both Equifax and Experian came back with good scores (440 and 974/1000), but a note mentioning I had previously been in arrears (I missed a CC payment in December) due to some missed payments (3-4 total last year)

Can anyone suggest an alternative lender, or some insight into Nothern Rock's selection criteria - is it because I'm a student? I'm keen not to fire off loads of applications, as I don't to impact my credit file. As I mentioned, looking to borrow around £4500, but pay off over 6 years.

Moneyback appear out of the question, as they requre no missed payments in the last 6 months (kicking myself now...:doh:) , but otherwise I'm looking (of course) for a low APR, which surely (I'll concede I've been blinded by the stupid credit scoring) should be available to me as a low risk applicant?

Thanks guys,

David

Astaroth

The scores credit reference companies give dont mean anything at all as each lender has its own scoring system.

On the face of it you have 4 missed payments last year alone which isnt good. You are only on £17k with a "few" credit cards already, I would assume an overdraft and also other loans (student if nothing else). Whilst I am no credit expert on the face of it it doesnt look that strong a basis to be asking a new lender for another £4.5 credit

Phoenix79_2

The missed payments have screwed you to be honest.

It might be worth applying for a loan with your bank. You may not get a low rate but it might be your best bet now

dnamurphy

Hmm... I thought as much. I'm not sure why Northern Rock then said that my credit history was fine though.

I do have a student loan, but as far as I'm aware, this has no impact on my credit rating (there isn't any record of it on my credit profile). Do banks you have accounts with look favourably on loan applications? I went crazy at age 13(ish) and opened up quite a few bank accounts (the lure of £5 WH Smiths vouchers.... happy days!) so there are a few banks I could use.

I recently closed down a Credit Card with Lloyds, which is a very plain current account - no debit card, no overdraft and no charges applied to the account. This is where my salary goes in - would this be the best candidate for a loan application?

I've also noted Lloyds have further education and graduate loans - as I'm both a graduate and a student, is it worth looking down this route as well? I'd still be keen to look somewhere that offered lower rates, but I suppose I'd have to take what I was offered to some extent.

sandralovescats

Although your loan is unsecured, usually the car is used as collateral so if you failed to make the payments, etc, the car could be repossessed.

going2die_rich

I believe they consider loads of other things like if you've been in employment for over a year or not. So you might have no ticked their box in that aspect. So I wouldn't take it as not being able to get a loan else where.

Northern Rock have taken on some bad debts recently so I know they were attempting to reduce their risks by being a bit more cautious - heard that from someone who works for them about 6 months ago, but it's likely to still be in effect.

dnamurphy

So it's definitely worth mentioning that I'm using the loan for a car? I'd be happy to use it as collatoral if this reduces risk. Is this an automatic given if I tell them I'm using it to fund a car purchase?

I have admittedly only been with my present employer since October, but the nature of the funding is that I have a guaranteed income for 4 years. Does anyone know how banks look at applicants that hold accounts with them? The reason I mention Lloyds is that they're always pestering me for an "account review" - ie get me to upgrade to an account with an overdraft etc. That said, their rates suck a bit! :rolleyes2

less2303

It depends which type of loan it is from Northern Rock, I suspect it is a personal loan, and as such it will not matter what you are purchasing with it.

It would have to be a Hire Purchase agreement for the car to be `secured` on it.

dnamurphy

Yes, it was an unsecured personal loan - I was a little surprised I could have used the purchase as security. Does anyone have any suggestions what my best course of action is - I'm not really keen to fire off applications on a whim, as I don't want too many notes on my credit record.

I also have an Allicance & Leicester current account (with overdraft) - has anyone had any experience with A&L for loans?

Should I speak to Northern Rock and ask them why my application was declined, or will I get some standard spiel?

Phoenix79_2

An unsecured loan is as it sounds.....unsecured! The car isn't used as security or collateral.

Pantera_Fan

dnamurphy wrote:

I recently closed down a Credit Card with Lloyds, which is a very plain current account - no debit card, no overdraft and no charges applied to the account. This is where my salary goes in - would this be the best candidate for a loan application?

I've also noted Lloyds have further education and graduate loans - as I'm both a graduate and a student, is it worth looking down this route as well? I'd still be keen to look somewhere that offered lower rates, but I suppose I'd have to take what I was offered to some extent.

I think you can only get the graduate loan if you have a gradute account. Do you have internet banking with LTSB? If you do you can get a quote without filling in loads of forms - just log in and click on apply for loan. Takes next to no time to get a quote and when I done this I had the money in my account in less than 10 minutes from the start of the application by using the quicksign!

May be better going for a £5,000 loan - this seems to be the normal cut off point for lower interest rates.