Few questions about loans - please please help!

deedee77_2

Hi

I need to apply for a loan next week and have a few questions.

1. I have an overdraft which I do have to go into most months. Does this show on my credit file, or would it just be my bank that would know about this.

2. I have three credit cards and have £3000 on one (limit 6100), £900 on another (limit about £7,500) and £600 on another (limit £1000) and £700 on another (limit £4000). Will this affect my rating as I have access to so much credit. Will it be an idea for me to transfer the balances onto other cards and close them. The one with the limit of £7,500 is due a refund in about 10 days. This will not go on if I close it.

3. Last one! My bank is offering a 6.9% rate, MBNA is offering me 5.9%. Do you think I have more chance being accepted by my bank. Also if I apply for a lower rate (e.g. Moneyback (A&L)) if I get turned down for this will it affect my rating badly.

Thanks for your time. I really appreciate some help as I am really really worried about this.

Thanks xx

Rafter

deedee,

1. Your overdraft may show up depending on your bank and the time in the month the credit file is sent from your bank to the agency.

2. The number of credit cards and available credit may count against you. It depends on the individual banks scorecard and how the credit relates to you overall disposable income. If you have been managing it carefully for a while and are looking for a loan to consolidate these debts that might help? If you are looking for a loan to buy a car or something though, and are therefore getting into more debt, that may count against you.

3. You probably have a better chance being accepted by your bank. You may have to play a trick with payment protection insurance though. Banks can't make money out of loans at 5.9% and therefore rely on half the customers taking overpriced payment protection insurance (PPI) that increases the real cost to over 10%. However, If you apply initially saying you want payment protection, you will probably secure the best rate. Then simply call up a couple of days later (within 14 days), say you don't want the insurance or have found cheaper cover elsewhere and ask them to remove it. They won't like it, but then cannot legally increase your rate or stop you without breaching OFT rules.

2 loan application won't hurt - more than 2 may make you look desperate and will cause automatic declines.

Good luck.

R

peterg1965

I would go with my own bank provided their interest rate was competitive. You would stand more chance of success with them, in my humble opinion.