MSE News: A payday loan could cost you a mortgage

rtho782

Just an update and a suggestion to others!

A couple of years back payday lenders only reported to CRAs if an account was in default. They then started doing it and sold it to us as showing positive credit info, and certainly there is/was an argument for this.

While all info held has to be accurate there is no requirement for it to be complete, and there is no regulation or legislation requiring data to be reported to CRAs. Last time I lent my mate £20, I certainly didn't inform Experian....

I put this to the two payday lenders who show up on my file. One has referred it up to see if they can remove the info they have put on my file, the other has agreed to remove it, thus proving how pointless this whole thing is. All this will do is stop repaid agreements from showing on people's files.

~Brock~

rtho782 wrote: »

I put this to the two payday lenders who show up on my file. One has referred it up to see if they can remove the info they have put on my file, the other has agreed to remove it, thus proving how pointless this whole thing is. All this will do is stop repaid agreements from showing on people's files.

Nice try, but i suspect that this suggestion will be dead in the water before long, and I will explain why.....

Several years ago, there was an investigation into doorstep lending, prompted by a super complaint from the usual champions of the deeply concerned about everything movements. Once the investigation had been completed it was found that the market worked reasonably well, and that the lenders concerned provided a service that was generally valued by their customers.

The only real issue that came out was the difficulty in switching between providers due to the lack of clear comparisons between lenders and the inability for each lender to access the payment histories of their competitors customers, because nobody reported to CRA's at the time.

The subsequent requirements that were introduced as a result was a comparison website (http://www.lenderscompared.org.uk/) and a requirement for lenders above a certain size to submit their customer account data to CRA's. For the home collected credit industry, therefore, this is not an optional activity for them.

There is a similar investigation currently taking place in respect of the Payday Lending industry. Whilst I cannot say for sure what the outcomes will be - I strongly suspect that, apart from a few firms made an example of by having their credit licences cancelled, there will be a similar requirement to submit data to CRA's, this time to assist the need to lend responsibly by addressing the ease by which those who habitually fail to repay their lenders can walk into the firm next door and take out a new one.

Hope that makes sense!

Househunter1_3

I've just read this story and it's got me a bit concerned.

I, regretfully, took out a couple of payday loans around 18 months ago when things were a bit tight. They were both paid off quickly and I thought nothing more of it.

Since then, my income has increased, my debt is now zero and any previous late payments have dropped off my credit file.

I recently applied for a mortgage with my husband through a broker. We were approved for an Agreement in Principle after a credit check with Nationwide.

But now, after reading this article, I'm worried that we may be rejected when the full application is assessed because of these ridiculous loans.

I see GE money is only talking about rejections for payday loans taken out in last year. Does anyone know what other lenders' are doing?

I know it's my own stupid fault, but really hope it doesn't scupper my mortgage.

Thanks

BugsyBrowne

Househunter1 wrote: »

I've just read this story and it's got me a bit concerned.

I, regretfully, took out a couple of payday loans around 18 months ago when things were a bit tight. They were both paid off quickly and I thought nothing more of it.

Since then, my income has increased, my debt is now zero and any previous late payments have dropped off my credit file.

I recently applied for a mortgage with my husband through a broker. We were approved for an Agreement in Principle after a credit check with Nationwide.

But now, after reading this article, I'm worried that we may be rejected when the full application is assessed because of these ridiculous loans.

I see GE money is only talking about rejections for payday loans taken out in last year. Does anyone know what other lenders' are doing?

I know it's my own stupid fault, but really hope it doesn't scupper my mortgage.

Thanks

IMHO I can't see how 2 PDL payments 18 months ago will be that much of a negative I would say its more towards constant PDL borrowers who can't manage from week to week.