Payday loan means being turned down for a mortgage in the future

James_N

Reportedly, having ever taken a payday loan will now bar you from a mortgage with many UK lenders in the future.

That bastion of truth, the Daily Mail, has the details.

http://www.dailymail.co.uk/money/cardsloans/article-2231040/Payday-borrowers-face-Christmas-credit-shock.html

From December 2012 onwards, Experian will identify payday loans separately - and the banks react that the new information may trigger "fatal criteria" leading to automatic rejection, much as already happens with a serious financial mismanagement history.

kingstreet

As long ago as the middle of last year, my network's compliance department was warning that some lenders were starting to view payday loans as a precursor to potential financial problems and underwriting accordingly.

betmunch

We have a number of cases that have been turned down due to using payday loans.

Its not new news to anyone in the industry.

Buzby

It isn't the 'industry' the news is directed at - but the consumer! The fact PdL's are detrimental need to be highlighted.

makeyourdaddyproud

About time.

Banks, like many other institutions, have to make sure their interests are safe. It is absolutely right that if you are forced to take a PDL, then you have no right to a mortgage.

Bail-outs cannot continue, and this is a further step in the right direction.

droiderm

makeyourdaddyproud wrote: »

It is absolutely right that if you are forced to take a PDL, then you have no right to a mortgage.

The words sledgehammer and nut spring to mind.
You would suspect that reasonable approach would be not to look at a historic event and reject purely on the basis of that.
But, they can do as they wish.

kingstreet

Although I can understand the possible implications, that a borrower had a short-term cashflow issue, surely those using an overdraft for a short period are guilty of exactly the same offence?

Not everyone will constantly roll-over payday loans, just as not everyone will always be overdrawn. Surely, the frequency of such usage should be more important than the source of the finance?

Perhaps your average overdraft user is a better "class" of customer and more deserving of a mortgage?

makeyourdaddyproud

Perhaps your average overdraft user is a better "class" of customer and more deserving of a mortgage?

I don't think that is the issue, most people with cash flow problems are well aware of their overdraft facility and PDL's and an extension of what they can borrow on top of the overdraft. It would be madness to engage a PDL at the advertised interest rates when a better authorised overdraft rate is available.

In my opinion, if someone has to resort to a PDL, where better sources of short term finance arn't available, one has to question their longer term solvency, if they are accepting the 1000's of % APR of a loan shark.

I can understand the "hammer and nut" opinion, but even one borrowing episode must be scrutinised carefully.

grey_gym_sock

i have some sympathy with ppl who are rejected by automated systems, when a human being looking at their record might agree that taking a PDL once some years ago was a 1-off. however, the automated systems are not new. and the general idea that PDLs are a very bad sign is (IMO) perfectly correct.

"ever" is, i take it, an exaggeration, because won't PDLs drop off your record after 6 years?

betmunch

Buzby wrote: »

It isn't the 'industry' the news is directed at - but the consumer! The fact PdL's are detrimental need to be highlighted.

Yes I realise that thanks.

My point was that if clients use a professional they would have known and circumvented the issue.

bugged

makeyourdaddyproud wrote: »

About time.

Banks, like many other institutions, have to make sure their interests are safe. It is absolutely right that if you are forced to take a PDL, then you have no right to a mortgage.

Bail-outs cannot continue, and this is a further step in the right direction.

Common sense isn't welcome on here. They will run you off. :rotfl:

I completely agree with your post. Well said. :T