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

moneemonee

I had a few pay day loans last year, I had access to an overdraft, access to 6k on a credit card money in ISA and 20K in savings.

Naively and in hindsight stupidly thought a pay day loan would improve my credit score, which it actually did boosting me from very good to excellent. However I applied for a mortgage and was turned down for using a PDL.


i am not financially unaware or irresponsible as some of these posts suggest, I earn 36K a year, have no debt and have ALWAYS paid my bills, however because I chose not to dip into my savings (which i was then at risk of not putting it back in), or spend on CC on not pay back full amount etc... or not borrow from mum and dad like the majority of the population this has seen as poor management of money, how 1 person manages money is different to another, I know how I work, and I know come what may I would pay back a PDL as I am fully aware of the implications of not doing so.


I agree regualr/continuous use of a PDL coupled with poor credit/no access to credit/ no savings/ no deposit should definately indicate a refusal of a mrtgage, but I do not think that it is fair when PDL is the only "negative" issue on a credit score.


We were aslo told by a high street lender that we would "never" be considered due to PDL

droiderm

Sorry to hear that
Who was it ?

Dave_Ham

I will take a punt on Natwest.

Some lenders still do not have an issue with PDL's, so long as everything else stacks up..

ValHaller

moneemonee wrote: »

Naively and in hindsight stupidly thought a pay day loan would improve my credit score, which it actually did boosting me from very good to excellent. However I applied for a mortgage and was turned down for using a PDL

It is becoming plainer and plainer that nobody who lends actually uses or gives a tinker's cuss for the 'credit score' people pay good money for. You begin to wonder if the PDL people are bankrolling the 'credit score' providers to do just this ie boosting the 'credit score' of anyone taking a PDL

The advice has to be never undertake any financial action to boost your 'credit score'

Dukesy

ValHaller wrote: »

It is becoming plainer and plainer that nobody who lends actually uses or gives a tinker's cuss for the 'credit score' people pay good money for. You begin to wonder if the PDL people are bankrolling the 'credit score' providers to do just this ie boosting the 'credit score' of anyone taking a PDL

The advice has to be never undertake any financial action to boost your 'credit score'

That said, mortage providers do want a credit score. I was advised when I turned 18 to get a credit card in order to provide a sphere of reference, as no credit score is as bad as a poor credit score. I use it for online purchases only and always pay the full amount off immediately. I also have an overdraft, but its arranged and I never exceed it, a contract phone and I pay my car insurance monthly. All that and, when we went to get our most recent mortgage, I was told ii had an excellent credit score, which does help. I think that certain things are sensible, but if you have to resort to a PDL, I would always assume severe financial mismanagement and am not surprised lenders don't like it.

ValHaller

Dukesy wrote: »

That said, mortage providers do want a credit score. I was advised when I turned 18 to get a credit card in order to provide a sphere of reference, as no credit score is as bad as a poor credit score. I use it for online purchases only and always pay the full amount off immediately. I also have an overdraft, but its arranged and I never exceed it, a contract phone and I pay my car insurance monthly. All that and, when we went to get our most recent mortgage, I was told ii had an excellent credit score, which does help. I think that certain things are sensible, but if you have to resort to a PDL, I would always assume severe financial mismanagement and am not surprised lenders don't like it.

Mortgage lenders do not want a 'credit score'. Any real lender will roll its own credit score out of the data from the Credit Ref Agency and data it holds itself.

Problems do arise if people have no financial history - exacerbated if they are not on the electoral role. As I see it the most important things are to be on the electoral role and have a complete address history backed by continuous voter registration.

Paying car insurance monthly indicates less financial resilience than paying annually but I concede that it might be viewed positively. The way things are going soon you will not avoid having a complete record of every penny you spend available for lenders scrutiny.

There are people coming on here who get told to take out a credit card and take out a poor one - then pay minimums because they think if they pay up in full it won't appear on their credit records - al the while saving for a house.

As it is easier to put something on your credit record than to take it off, I still say better not to undertake financial commitments to game the 'credit score'

Dukesy

ValHaller wrote: »

Mortgage lenders do not want a 'credit score'. Any real lender will roll its own credit score out of the data from the Credit Ref Agency and data it holds itself.

Problems do arise if people have no financial history - exacerbated if they are not on the electoral role. As I see it the most important things are to be on the electoral role and have a complete address history backed by continuous voter registration.

Paying car insurance monthly indicates less financial resilience than paying annually but I concede that it might be viewed positively. The way things are going soon you will not avoid having a complete record of every penny you spend available for lenders scrutiny.

There are people coming on here who get told to take out a credit card and take out a poor one - then pay minimums because they think if they pay up in full it won't appear on their credit records - al the while saving for a house.

As it is easier to put something on your credit record than to take it off, I still say better not to undertake financial commitments to game the 'credit score'

I suppose that's it - don't undertake financial decisions without thinking them through properly. My credit card is one that was offered with my bank account and has an excellent apr and is always paid off, so I assume that's why it's a good thing for my credit. In contrast, if you're having to borrow money at 4000%, that's never going to look good...

dunstonh

That said, mortage providers do want a credit score.

No they do not. The scoring system promoted by some credit recording agencies is just a marketing thing to give you something to pay them for. The lenders don't care for that score and it does not reflect their lending criteria. The lenders will credit score on their own criteria.

Crediting scoring is risk analysis lenders make which will in part be based on data held via the credit scoring agencies. The "credit score" that the credit scoring agencies give you is their own score based solely on electronic data recording.

Dukesy

dunstonh wrote: »

No they do not. The scoring system promoted by some credit recording agencies is just a marketing thing to give you something to pay them for. The lenders don't care for that score and it does not reflect their lending criteria. The lenders will credit score on their own criteria.

Crediting scoring is risk analysis lenders make which will in part be based on data held via the credit scoring agencies. The "credit score" that the credit scoring agencies give you is their own score based solely on electronic data recording.

I'm not pretending to be a mortgage expert, all I'm saying is that the first thing that every bank we spoke to when we were comnparing mortgages was to do a there and then credit scorey checky thing on us, no paperwork or anything else provided by us.

julieb1987

I have had a couple of payday loans in the past. Easily accepted for a mortgage with Natwest in August (completed 2 weeks ago). Looking on my credit reports, there is no evidence of these loans on there!