Why can't i get a loan?

mumtomany_2

Hello,

I hope some of you maybe able to give me some tips or explain why i maybe being refused credit.

I recently applied for a loan of £11450 from my bank Santander. I have a balance of £3129 left on my current loan but this would have been cleared with part of the new loan.

My credit report shows i owe a total of £3940 including this santander loan. I have other old account which have been paid off with no missed payments. I am on the electrol register.

My total income is around £31000 before tax and i have very minimal outgoings. I have never missed a payment on my loan or Credit Card. My bank account only has a £400 overdraft which i haven't used for sometime and i have savings of £1700 with santander.

Why would i be refused credit?

There was a debt owed to Shop Direct which showed as settle on the 1/11/08 and the file showed a 0000000033U. I rang Shop Direct and they have agreed to rectify the report but surely this wouldn't be effecting me?? It was settled over three years ago according to the report (not that it should show missed payments as that wasn;t true).

The only other thing is there are searches for car insurance. Does this cause problems? They show as quotes?

Any help very much appreciated.

iolanthe07

From what you have written it is hard to see why you were refused, though loans are becoming much more difficult to get these days. It might be worth asking Santander why they turned you down, but they are not obliged to tell you. Every bank has its own criteria, and you could try another lender, but don't make too many applications. Quotes for car insurance should not have any effect as these are not applications for credit.

sulkisu

What does 'minimal outgoings' mean, i.e as a proportion of your net income? You are probably trying to borrow too much, especially when added to the amount that you already owe, it adds up to almost 50% of your annual gross income.

mumtomany_2

sulkisu wrote: »

What does 'minimal outgoings' mean? You are probably trying to borrow too much, especially when added to the amount that you already owe, it adds up to almost 50% of your annual gross income.

Minimal outgoings: In my case this is around £800 a month for all bills, direct debits etc. Food and petrol on top.

I did say the loan would be used to clear the £3129 on my other santander loan. So not really 50% of my income. BUT that does lead to a good question: Is there a percentage limit on your total income you can borrow then?

Tixy

Is your existing loan with santander? There have been quite a few reports recently of banks not be willing to lend more money until your existing loans are paid up (a change from when they seemed to be flogging topup loans like there is no tomorrow).

You could talk to them about - see if its a blanket decline or if a lower amount might be approved.

Tixy

mumtomany wrote: »

BUT that does lead to a good question: Is there a percentage limit on your total income you can borrow then?

Not a strict limit - but as a guideline people tend to struggle to get new credit that will take them to over 50% of their gross income (and that includes unused credit eg on credit cards etc).
Do you have a lot of unused credit on cards / your overdraft etc?

mumtomany_2

Tixy - it is with Santander. I asked them if i applied for less woudl it be approved and they said they didn't know! I don't want to apply too many times as i know this can effect my credit rating too.

Is it worth setting up a meeting in the bank rather than talking to the call centre staff you think??

mumtomany_2

Tixy wrote: »

Not a strict limit - but as a guideline people tend to struggle to get new credit that will take them to over 50% of their gross income (and that includes unused credit eg on credit cards etc).
Do you have a lot of unused credit on cards / your overdraft etc?

My credit limit on my CC is £1750 and my O/D is £400. SO it looks like i will need to wait a while to pay off some more of my loan or apply for a smaller amount.

sulkisu

mumtomany wrote: »

Minimal outgoings: In my case this is around £800 a month for all bills, direct debits etc. Food and petrol on top.

I did say the loan would be used to clear the £3129 on my other santander loan. So not really 50% of my income. BUT that does lead to a good question: Is there a percentage limit on your total income you can borrow then?

Unless the loan is with the same bank and the money taken up front to clear the first loan, as far as the bank is concerned, there is no guarantee that you will repay the loan with it.

It might also depend on what the loan is for. A large loan to pay for something like a car or new kitchen will probably be viewed more favourably than a similar sized loan to consolidate debts or for general spending.

Tixy

It might be that its just a bit too high for them in terms of affordability - although even once the balance is lower they might still choose to decline until first loan is fully paid.

You are right not to apply lots of times - although maybe you could try either zopa or nationwide who do a soft search and doesn't show up as a credit appliciation to other lenders? Could you possibly try applying for a smaller amount with one of these - or does it need to be that amount or nothing?

mumtomany_2

sulkisu wrote: »

Unless the loan is with the same bank and the money taken up front to clear the first loan, as far as the bank is concerned, there is no guarantee that you will repay the loan with it.

Thanks, yes i did apply to clear the balance at the same time as applying for the loan, as it is the same bank.