Can't get loan, and I really can't see why

TainshyStryder

Hi everyone,

In the last 3 months I've tried to get a couple of loans for a new bicycle and guitar using the respective stores credit schemes (Think both used a third party finance company though)

The bike was for £1000 loan after I'd paid a 30% deposit over 12 months and the guitar £400 loan over 24 months after paying a 50% deposit. I'd rather pay out of my 'fun money' from my wage each month using low interest credit than use my savings, as I'm saving for a house deposit.

I'm 23 and started my job 6 months ago and earn £28k a year. I also worked a job for the past 5 years whilst at uni on both part-time and full-time.

I'm on the electoral roll at my current address, lived here for 6 months, and was on it at my previous address for 2 years.

I've got my student loan but I don't think that appears on the credit checks. Apart from that I have only ever had a couple of other things; my student overdraft of £200 which I only ever dipped into just before student loan day, if I'd not been working much overtime that period.

Also had a store card which I used for the discounts mainly so it was paid off in full each month. And apart from those I've never missed a payment on council tax or my bills. phone and gas.

I've also tried applying for a Luma credit card as feedback on the site suggests it's good for building/reparing a credit history, but I even got rejected for that.

I checked my credit rating on experian and apparently my rating is 999 excellent but it obviously isn't!

Any advice or pointing out why I'm getting rejected would be greatly appreciated

Thanks

BugsyBrowne

At least you've realised how meaningless and flawed Experian's scores are.

Are you on the electoral roll?

YorkshireBoy

TainshyStryder wrote: »

I'd rather pay out of my 'fun money' from my wage each month using low interest credit than use my savings, as I'm saving for a house deposit.

Unless the loans were to be given at 0%, then I can't see the logic in paying (up to) 7 times the interest rate you're earning on your savings! Use your savings, then replenish them from your "fun money".

I'm 23 and started my job 6 months ago and earn £28k a year. I also worked a job for the past 5 years whilst at uni on both part-time and full-time.

If you've been with the same bank all this time, and if you really want to pay (up to) 7 times more interest than your savings will earn over the period, then why not ask your bank for a loan?

But be aware that they will see the 2 recent searches, so that may influence their decision somewhat.

TainshyStryder

BugsyBrowne wrote: »

At least you've realised how meaningless and flawed Experian's scores are.

Are you on the electoral roll?

Yes I am

YorkshireBoy wrote: »

Unless the loans were to be given at 0%, then I can't see the logic in paying (up to) 7 times the interest rate you're earning on your savings! Use your savings, then replenish them from your "fun money".

The bike loan was 0% and on the guitar total interest is £17.

CLAPTON

what do your actual credit records (all three) show?

TainshyStryder

CLAPTON wrote: »

what do your actual credit records (all three) show?

It shows my bank account (with overdraft details), store card, gas bill history, previous addresses and the electoral register. Previous credit searches.

And sorry, what do you mean by all three?

balmk

There are 3 credit reference agencies: Equifax, Experian, and Callcredit.

You can get a free trial to see all three at https://www.checkmyfile.com, or you can get your £2 statutory report by going to each one independently.

If you do go for checkmyfile, go via https://www.topcashback.co.uk for some free cashback.

With savings rates being what they are, as Yorkshireboy says unless the loan is at 0% you are better off buying out of your savings. You could try for a 0% purchase card - Nationwide and Barclaycard both do soft searches (pre-application checks) to give you an idea if you are likely to be accepted.

Don't do too many searches in a short period of time as it makes you look desperate which is a major turn-off for lenders.

YorkshireBoy

balmk wrote: »

You can get a free trial to see all three at www.checkmyfile.com

...but be aware a report from this company does not contain all the detail you could get if you went directly to each CRA (see their T&Cs).

Better to go direct (and spend £2 each, or grab a free trial) to each CRA in my opinion.

YorkshireBoy

TainshyStryder wrote: »

...on the guitar total interest is £17.

And how much interest (in monetary value) would your savings have made over the same period?...£3?...£4?

You need to compare rates (APR vs AER), rather than cost. The guitar finance looks like 8% APR (£200 over 24 months is £9.05 per month and costs £17 in interest), so you're paying at least 4 times the net interest your savings will make over that period. Doesn't make sense at all to me I'm afraid.

londonlydia

As a guess, it may be because they are only seeing 6 months employment history. Even if you worked as a student, they will see that employment as working around study...and I wouldn't be surprised if they see fresh out of uni people as higher risk now given the high numbers of unemployed in that category. They've only seen the steady wage coming in for the last 6 month after all.

The only other thing I can think of is if you have an unusual job, again there will be risks associated with each profession, e.g some industries more likely to make you redundant.

I suspect that you've sought the interest free deals etc that they only keep for people with assets and long pristine credit histories....

DCFC79

A 0% credit card ?

Id stop applying and save up what you need/want and pay cash.