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Car Loan

andykent
andykent Posts: 16 Forumite
Was just after a bit of advice...I've gotten a credit report from Equifax & my credit score is showing up as 454 (about average) with one missed payment on an old orange phone bill back in 2011 (their fault).

I was just declined a loan from Sainsburys & obviously don't want to apply for any further loans unless i am guaranteed to be accepted, or know the reason why I'm being declined credit.

I have a credit card (opened Jan 2012) with a fairly large balance that i am paying off monthly -(planning to have it cleared by october) so surely this shouldn't have an adverse affect?

I did look at getting a Halifax loan but when i did a soft search when i was logged into my online banking they were quoting 24% APR! 3 Times the amount they advertised before i had logged on!

Does anyone know why I'm struggling to be approved? Or possibly any loan companies/banks that will offer a competitive rate & are likely to approve my application?

Thanks,

Andy
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Comments

  • rdchick
    rdchick Posts: 1,815 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Hi Andy

    there are lots of factors which loan providers look for when people apply for their loans including salary (how much do you earn compared to how much you want to borrow including what you have already borrowed and paying back) your history, whether or not you are on the voting register...

    Hope that helps xxx
    Life is too short not to love what you do.
  • NeverEnough
    NeverEnough Posts: 986 Forumite
    Andy, in order to get meaningful advice on here about loans you will need to provide details like how much outstanding debt you already have and what your income is - lenders do not like high debt-to-limit ratios such as you using say 80% of your existing credit and an overdraft, for instance. If the existing credit limits you have are more than 50% of your income ( excluding mortgage debt) then you may well be declined by other lenders as being a high risk for them.

    And then theres the electoral roll etc as well - are you on it? Have you moved recently? Changed address frequently? All these things are relevant to some lenders.
  • andykent
    andykent Posts: 16 Forumite
    Ok thanks for the advice.

    I earn £24k a year & have been in my current job 18 months, I have £3000 outstanding on my credit card & was looking to borrow £9k over a 5 year term. I don't have a mortgage. I did have a previous car loan however that has since been settled & i never defaulted on the payment. I have only ever missed one credit card payment but i settled that with my bank & had it removed from my credit report?
  • BugsyBrowne
    BugsyBrowne Posts: 5,697 Forumite
    IMO its all down to your current debt compared to your salary.

    You could have made all payments on time for 10 years but if someone earns say 25k a year and have 15k of current debt then it would be a decline.

    Lenders will always like to see your debt at under half of your salary if your after some coin.
  • BugsyBrowne
    BugsyBrowne Posts: 5,697 Forumite
    andykent wrote: »
    Ok thanks for the advice.

    I earn £24k a year & have been in my current job 18 months, I have £3000 outstanding on my credit card & was looking to borrow £9k over a 5 year term. I don't have a mortgage. I did have a previous car loan however that has since been settled & i never defaulted on the payment. I have only ever missed one credit card payment but i settled that with my bank & had it removed from my credit report?

    Missing that payment last year is only going to have a negative effect.
  • andykent
    andykent Posts: 16 Forumite
    surely one missed payment wouldn't mean the loan being declined? Especially when it was sorted with Halifax & they removed associated charges & also removed it from my credit report? It does not show any missed payments or advisories on my credit card report from Equifax?
  • You make the missed payment to Orange sound as though it was ages ago when in fact it was only last year. Remember everything stays on your credit report for six years.

    And your so-called credit score of 454, although it means nothing to any lender, tells me that your credit report is actually rather poor. You've scored less than 50% as that 454 is out of 1000.
    "There are not enough superlatives in the English language to describe a 'Princess Coronation' locomotive in full cry. We shall never see their like again". O S Nock
  • NeverEnough
    NeverEnough Posts: 986 Forumite
    edited 24 July 2012 at 11:21AM
    Then it won't have any effect at all. ( the missed payment that you resolved with the bank- it was resolved and not on your credit report so cannot affect it) is the missed Orange bill a second missed payment then?

    The problem is probably that you have £3k credit card debt and want a £9k loan, this will be 12k credit and your income is 24k, so 50% - many lenders esp those with the best deals, will decline that level of credit compared to income.
  • andykent
    andykent Posts: 16 Forumite
    Ok, thanks for the advice chaps. Didn't realise the credit score was scored out of 1000! Equifax's site really isn't clear on that and actually stated on their report that my credit rating was above average!

    I'll pay my credit card off before re-applying.
  • Apples2
    Apples2 Posts: 6,442 Forumite
    It isn't the Credit Card outstanding debt they are looking at, it is the Credit LIMIT.

    If you owe £3k but have £5k available, they will use the £5k so you would be well over the 50% magic number.
    There is nothing to stop you going out today and buying a £2k Plasma TV so this must be factored in.

    There are advice columns on here about reducing Credit limits on cards if not necessary to make you look more attractive.
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