Good Credit Score....but refused a loan????

puffin77

Hi there,
Can someone please help me - I have a Nationwide Account and was offered, exclsuively for me apparently, in my online banking offers on various products such as credit cards, loan etc etc. So I applied for a loan as I have some credit cards and a loan I want to consolidate thinking I was eligable due to this "offer". I got a quote at 13.9% APR (yes, a fair amount but cheaper than some of the interest I am paying on the cards) for £12500 over 5 years, £280ish a month. Fine. But then I was declined. So I checked my Experian report and I have a Good Credit Rating at 933 but said these two things:

Positive Factors:
The value of your highest credit limit indicates a lower risk.
The age of your accounts indicates lenders are likely to view you as lower risk.
Negative factors:
You have no successfully settled non-mail order accounts.
The usage of your available credit indicates a higher risk.

What does that mean? I am on the Electoral Role, have defaulted on any payments etc etc so how can a "Good" rating get refused?

How can I improve on the negative factors? I cannot close a card for example as that's what I need the loan for!?! :eek:

Thanks for your help! :j

Tixy

Hi, welcome

The credit score that the credit reference agencies will sell to you isn't really a true reflection of how likely you are to be able to get a particular product from different lenders for a particular amount.

Whilst a credit search performed for an application will show the potential lender whether you have paid back credit on time historically its far from the only thing they assess.

How much do you owe in total on all your existing debts (loans, cards, overdraft etc - excluding mortgage)?
And what is your annual income?
(Given the amount you want to borrow and that you presumably already have a similar level of debt - its may well be that you are being declined based on affordability rather than anything on your credit file).

However looking at what your credit file does indicate

The usage of your available credit indicates a higher risk.

Are your existing cards/overdraft near maxed? how much do you owe on these compared to how much the limits are?

Tixy

BugsyBrowne wrote: »

You owe 12.5k and want to borrow another 12.5k if your salary is under 50k then theirs you answer.

Thats not really an answer at all though to a new poster. Not without quite a bit more explanation.

puffin77 - when you look to take out a new loan for consolidation the new lender cannot guarantee you will use this to pay off your existing debts. So they will consider whether you could afford repayments on both the existing debts and the new loan based on your existing income.

As a guide, in the current financial climate people find it harder to get new credit that takes them to above 50% of their total income. Above that level and people are much more likely to be declined.

The only existing borrowing the new lender can ensure you pay off is any existing debts with them.

That said some people are able to get credit above that limit, and sometimes lenders will take into account that you plan to consolidate - so its not a hard and fast rule but it could well be the reason you are being declined unless you have a high income.

Apples2

puffin77 wrote: »

The usage of your available credit indicates a higher risk.

As a slight aside, I've always wondered how they would know minimum payments are made against a credit card, this may be a reflection.
If you make minimum payments, it is flagged in some way so can work against you. Make just £1 more than minimum and this flag is not present so appears significantly better.

Add up all your debts ensuring you add the Credit Card Limits (not the balance). How does that compare to your Salary?

Dr_Cuckoo3

puffin77 wrote: »

I have a Nationwide Account and was offered, exclsuively for me apparently, in my online banking offers on various products such as credit cards, loan etc etc. So I applied for a loan as I have some credit cards and a loan I want to consolidate thinking I was eligable due to this "offer". But then I was declined

What offer do you have for credit cards ?



If you have the offer shown in the photo above (exact wording) , then you can visit a branch and consolidate your credit cards - be quick or your loan decline may put them off approving you

Better to visit a branch than apply online

(Note that the interest rate on my Nationwide credit card was not their best rate , however there is a long 0% balance transfer and purchase offer)

Apples2

I would challenge the "Best Ever" claim, 19.9% APR seems to be the WORST rate they offer.

http://www.nationwide.co.uk/creditcard/credit-card/offer-deals.htm?intcmp=Intcmp_1303

Representative 15.9% APR (variable).
Other rates from 9.9% to 19.9% APR apply depending on individual circumstances.

EDIT: Ah, I see that was an old ad.

BugsyBrowne

Tixy wrote: »

Thats not really an answer at all though to a new poster. Not without quite a bit more explanation.

puffin77 - when you look to take out a new loan for consolidation the new lender cannot guarantee you will use this to pay off your existing debts. So they will consider whether you could afford repayments on both the existing debts and the new loan based on your existing income.

As a guide, in the current financial climate people find it harder to get new credit that takes them to above 50% of their total income. Above that level and people are much more likely to be declined.

The only existing borrowing the new lender can ensure you pay off is any existing debts with them.

That said some people are able to get credit above that limit, and sometimes lenders will take into account that you plan to consolidate - so its not a hard and fast rule but it could well be the reason you are being declined unless you have a high income.

Thats why I deleted it Tixy.

Your posts take about 3 weeks to read so thought I would do it in a sentence.

Tixy

BugsyBrowne wrote: »

Thats why I deleted it trixy.

Your posts take about 3 weeks to read so thought I would do it in a sentence.

I hadn't realised you were in the slow readers class brugsy. I guess its a good job there is no time limit on reading replies.

BugsyBrowne

Tixy wrote: »

I hadn't realised you were in the slow readers class brugsy. I guess its a good job there is no time limit on reading replies.

People age by reading your posts trix.

Dr_Cuckoo3

Apples2 wrote: »

I would challenge the "Best Ever" claim, 19.9% APR seems to be the WORST rate they offer.

http://www.nationwide.co.uk/creditcard/credit-card/offer-deals.htm?intcmp=Intcmp_1303



EDIT: Ah, I see that was an old ad.

It's their "Best Ever" credit card (although not their best APR in respect of their offer to me)

In the absence of a pre-approved offer they would have declined my application (they have done so previously)

I have credit cards with lower APR's and higher credit limits elsewhere

afly

puffin77, lenders make individual decisions on loan approval and the credit score is important but often only a small part of it.

It could be anything. No loans for debt consolidation this week. Only lend to A* ratings on a even day of the month, only approve applicants who wear top hats and carry a cane etc etc.

Don't take it too personally. Other lenders will use different criteria