Bank not taking my savings into account when asking for a loan

shain101

Morning all,

Brief background: Am newly out of debt after 20 years (due to stupidity as a young lad) and am now looking to rebuild my credit rating which is currently Poor. (Source: Experion).

Have read all tips on this site and have a question.

I asked my Bank (Nationwide) for a £500 loan to assist me in rebuilding my credit rating. I currrently have over £2,000 in savings (with them) and offered that as security.

I use them as my main bank (and have done for over 20 years) and pay in over £2500 per month in salary with minimal outgoings. I have no overdraft, credit cards or other loans.

I was told that the main source of their requirements for acceptance is my credit record. I informed them that it was poor and hence the reason for the loan.

I was, in effect, denied before i have even made an application.

Can this be right?

Any thoughts would be helpful.

Regards,
SHAIN

[Deleted User]

It can indeed be right. They have no guarantee you're not going to blow your savings and not pay back the loan. After all, why would you need a loan if you have that money in the bank.

A better way to build your credit without paying pointless interest would be to get a credit card - aqua, cap one, and so on.

CLAPTON

you would be better rebuilding your credit rating by getting a credit card, using regularly for things you buy anyway and always paying full (preferrable set up a DD for the full amount so you never forget and damage your credit rating).

Tixy

What actually shows on your credit files?

Whilst your own bank can be more likely to lend than other mainstream lenders, if your file is very poor then you need to look at rebuilding your file via subprime lenders first, such as a subprime credit card (dependant on what your file shows in terms of defaults, CCJs, insolvency etc)

Your bank won't take into account your savings as you might withdraw them all the day after you get your loan.

GlamGirlie

The bank could inhibit the savings account, thus preventing you from withdrawing the cash, but at the end of the day, you'd be paying uneccessary interest. Also banks lend according to how reasonable the request is, and simply to rebuild your credit rating wouldn't be a reasonable request. Not where I work, anyway.

Get a credit card as previously suggested, but if your credit rating is that bad, it might take a while before you are accepted for one. Unfortunately, having a bad credit rating stays with you for a long time.

shain101

Thanks for the replies. Noted and seems right and fair.

Have just applied for and received a Credit Card with apalling APR to help me rebuild the rating. Intend to do this properly and repay in full every month.

Have also just been put on the voters register so am well on the way to rebuilding the credit as per all the tips on this site.

Is 1 year a reasonable expectation before credit becomes Good (providing i don't default in any way)?

Will getting 2 or 3 credit agreements (and keeping them clean and paid regularly) better than just having 1 source of credit?

jc808

In this context, wouldnt 'rebuilding your credit rating' be unwise

malcolmffc

How come you only have £2000 in the bank if you have £2500 coming in and minimal outgoings? If that's true you should be able to save £1000 a month without any problem.

opinions4u

Why are you so keen to get back in to debt?

For crying out loud you've had 20 years of debt. Save up for stuff.

Don't spend the next 20 years paying interest on a load of new debts.

Money_maker

^^^^^^^^
Has the world gone mad, 20 years to clean your slate?
And you want to risk it again?

Who knows whats around the corner, any number of events could take place which could affect your income/expenditure.

When we got out of our pickle, we cut up the cards on the basis we would never need a credit rating as we wouldn't be using credit. As it happens, I applied for and got 2 CC's fairly recently. One was an assignment for work (I was paid to take it out) and one was to get the cashback (thanks TCB for free £50). Both are cut up and binned having never been used.

Firefox1975

why on earth would you want a loan when you have funds in savings?

can someone please explain this madness to me?