Loan Rejection - Confused and in need of ideas

bbhcmike

Hello all, I am looking at getting the loft converted to create another bedroom in my property as we are expecting a baby to come along around August time. I have seen an architect and he tells me the work is not going to cost less than £25,000.

We applied for a loan through my employer (I work for a bank) as it would be a preferential rate, and to my dismay they refused us on credit scoring. I was advised to look at my equifax file and so I paid £33 to view mine and my partner's details. My score is 422 and hers is 481, there is nothing there that a lender should be concerned about. I missed a payment on a credit card in 2003 but it was one payment, and that card is now settled and closed.

I have no debts other than my mortgage and we are both on good salaries, so I really can't understand the decision. We are able to save £2,000 per month, and this loan would only cost £250.

What can I do? Is it worth trying another provider? I really need this money to have the work done otherwise living is going to get cramped.

I appreciate you thoughts and ideas on this subject.

Rafter

£33! You should have been able to get the basic file for £2 each.

Anyway.....

Each bank uses a different scorecard but basically it boils down to:

- Can they identify you and is there a fraud risk?
- Do they think you will be able to afford repayments.

Given the information you have provided it looks like they have made an error.

It may just be that they don't offer staff loans over £20k or something and you have just got an automatic rejection.

Call them up - ask to have the loan manually scored/underwritten and see where that gets you.

A human being should be able to sort it out where a computer will 'just say no'

Otherwise your best route will probably extending your mortgage or taking a further advance if you have enough equity.

R>

tom188

My score is 422 and hers is 481, there is nothing there that a lender should be concerned about.

These scores are completely meaningless as each lender uses their own criteria. They are a complete waste of money.

Warriorsith

I'd get get a copy of your Experian file too and review the information on both files there's got to be something effecting your score? working for a bank then surely you know what details they have you etc perhaps you have too many Credit accounts on your file ie catalogues, perhaps you have too little debt owed, I know a couple that always paid by cash so when they wanted credit they couldn't get it as they weren't known to companies or they had too lower score as they hardly ever applied for credit, hope that makes sense.
My suggestion would be to wait for a few months possibly a year, if you can save approx £2k per month then it wont take you long to save the expected £25k needed for the loft convertion and would save you thousands in repayments, I realise there's some pressure to get the extra space prior to your baby being born but surely you make some space until you have enough money saved to convert the loft.

Good luck in whatever you decide to do. :T

bbhcmike

The staff loan will be at 5.4% and the advance on the mortgage 7.1%! There is no equity in the property as we only bought it (first place) last year (one of the things that strikes a warning on the credit file...). The only other thing that is against me is that I've only had my job for 3 months albeit secure full-time permanent well-paid with a big bank.

Would you suggest approaching another lender (next best I think is Northern Rock as although they are quoting 6.1% it may be that I can pay this loan off early especially if my employer allows me to take the loan/remortgage with them in the future) or hassling them into taking a "manual" look at my circumstances?

Moonbeam

I work for a large high street bank too and have experienced miskeying all to often - it sounds like there should be no real reason as to why you have been declined, but a credit score fail can be for loads of different reasons.........the main reason I've seen it though is when an application has been miskeyed - so if you can I would suggest you contact the credit sanctioning department of your bank and ask them precisely why the loan was declined. It could be something really simple that's been missed out - it could also be that as you have a big mortgage £25,000 is too much of a risk for the bank - can you cut costs anywhere and apply for slightly less?

Too many credit searches can pull your credit rating down a bit (particularly in a short time) so think carefully before you do another application and make sure it's with a company you really want to go with.

Good luck with it all

bbhcmike

It's a good point, I'd like it if they told me: this is the reason you are being declined (other than just saying it's a score related issue) then at least if it's because £25k is too much I can say ok, how much can you lend me.

I do find it laughable when I read about all these people who are getting into all kinds of debt troubles because the banks just lend them far more than they can afford, then I come along owning my own car, just having the 1 credit card which has a zero balance and never having had credit problems and I'm rejected. My financial circumstances have improved since my mortgage was improved 13 months ago!

Astaroth

If you have only been there 3 months are you even out of your probation period? My employers (also a bank) have everyone on a 6 month probation period and so any credit applications within this period are not likely to succeed on employee preferential rates and even as an external customer it gives a major knock to the credit score.

As others have said, credit scores given to you by anyone else other than the lender in question (who will never give you the numerical score as it is a closely guarded corporate secrete) is totally pointless unless you are going to get the person giving you the score to give you a loan.

bbhcmike

I was advised to check the Equifax file, and to be honest expected to find something on it (what I wasn't sure!). It is not the be all and end all but they do use the file to create a view of some of the lending criteria.

I do not have a probation period attached to my role, so shouldn't be a problem.

regularsaver1

you have nothing to assess other than mortgage

you haven;t been at your property that long, nor your job (loans do look at this). are you on the electorol roll?

Astaroth

Being told to look at your credit report is a stock answer that 100% of rejected applicants get if they query the reason.