Turned down on loan for "unknown" reason

miner1049er

Hi,
Could anyone help. I recently applied for a loan with nationwide and was offered a very good APR of 6.9%. When I confirmed I wanted to take the loan, the representative from nationwide said it had been declined and the code was "unknown". He said that if I represented a high risk then I should have been offered the loan at a much higher APR right from the start. He mentioned that moving bank from my current provider to nationwide may improve my chances of getting the loan but that he could offer no guarantees.
I need the loan and I have a good credit history but I'm not sure what to do as if I keep applying (and getting declined) then my credit file will be affected and I wont be able to take the loan on a low APR.

Any suggestions would be greatly appreciated.

Thanks

DCFC79

You say you have a good credit history but have you checked ? Any defaults, any other credit ? You might have to accept that you wont get the low rate of 6.9%.

miner1049er

thanks for your reply.
Yes I've checked and have no defaults and have had previous loans and credit cards. The figure of 6.9% APR was calculated after assessing my financial status and then the credit score was generated, with the "unknown" error code after confirming I wanted to go ahead for the loan. At this stage they wouldnt be able to lend me any money so the APR isnt affected, its just that they wont lend me any. If i keep applying at other banks then that may appear on my credit file and affect the APR that they can offer me. I feel like I'm damned if I do and damned if I dont at the moment.

DCFC79

Was the 6.9 shown from doing a soft search ?

Apples2

You have to check your credit file so see what it looks like.

Go to any of the CRA's (e.g Experian) and choose the £2 statutory report.
Immpossible to understand why the decline without knowing the facts.

List your current available credit, existing unsecured loans, credit card limits (not balances) and compare to your Salary.
The unconfirmed but sensible percentage is to consider a max of 50% of your Salary.

Add up all your debts and CC limitss AND add on the new loan you are looking for. If all that is more than 50% of your Salary, you may struggle to be accepted.

Now look for negatives on your Credit File, have you moved house recently, and missed/late payments, and defaults.
Are you using your Overdraft facility (agreed or not)

There are hundreds of variables but each lender uses their own mechanism to judge your risk, no two lenders use the same formula so it is completely guess work.

miner1049er

yes, the 6.9 was from a soft search. I'll pay for the credit report to be generated from experian and get all the facts.

It's just so frustrating that they couldn't give me a straight answer such as "you are in your overdraft facility" or something similar. Just to be told there is no reason why you have been declined, you just have! At this stage I don't know what to do to try and improve my score, or just what to do so that they will lend to me, never mind with a low APR.

Thank you for your posts

opinions4u

The main reason for being declined is failing their credit score.

This could be for a combined number of reasons.

Cell

Aren't they supposed to provide you with a specific reason (ie over-indebtedness, low income, etc) all be it in general terms?

Or is that just credit cards?

opinions4u

Cell wrote: »

Aren't they supposed to provide you with a specific reason (ie over-indebtedness, low income, etc) all be it in general terms?

Or is that just credit cards?

Failed credit score is a valid reason for loan or credit card.

Derogatory records on credit file is another.

miner1049er

Hi,

Thank you for your replies over the last few weeks. I did a credit report with experian and it came back as excellent, which perplexes me even more as to why they could not grant the loan. I do not understand as to how a reason for declining a loan can be "unknown". Very frustrating! At least if a reason had been given, such as "not a home owner", then I would understand. If anyone can provide an insight into this, with hopefully some advice, then please get in touch. Thank you.

SnowTiger

miner1049er wrote: »

Thank you for your replies over the last few weeks. I did a credit report with experian and it came back as excellent, which perplexes me even more as to why they could not grant the loan. I do not understand as to how a reason for declining a loan can be "unknown". Very frustrating! At least if a reason had been given, such as "not a home owner", then I would understand. If anyone can provide an insight into this, with hopefully some advice, then please get in touch.

Experian doesn't lend money and won't be aware of some of the details you entered on your loan application form. Give me a tenner and I'll give you an excellent credit report too. I don't lend money either and I doubt Nationwide would care what I have to say. :rotfl:

Of course there is a reason why your loan application failed. But it's a secret that only Nationwide's computer and those who created the algorithms for it will know.

Now, let's pretend Nationwide published those algorithms and you satisfy all of the rules apart from one: that loan you want is only available to punters who have an income of over £24,000 a year but your income is £23,500.

What would you do? Obviously, being an honest person, you'd simply accept that the loan isn't for you. Unfortunately, there are some unscrupulous people out there who would massage their application. If questioned they would claim the shortfall is made by from stuff they flog on eBay or a bit of on the side hod carrying for a friend.

And what if Nationwide did come back to you and say "Sorry, no deal. You're not a homeowner?" Still no loan and there's not a lot you could do about the reason for the rejection.