Can't get loan - good credit, employed, no debt

benweston

Morning all :-)

I'm a self-employed web designer with no debts, earn around £25k/year. My wife is a full-time teacher on £22k/year. The only 'debt' we have is about £500 on one of our overdrafts as the last few months have been a bit slow for me work-wise.

We applied for a £5k loan to three lenders in my wife's name (as I'm newly self-employed and it'll hinder more than help, I think) and have been refused all 3.

My wife has a good credit rating (850 on Experian), no previous CCJs, late payments and a guaranteed regular income. Her share of the outgoings amounted to £250/month, leaving over £1k/month spare to pay a £143/month loan!

Any ideas as to why she's being refused?! All I could think was that she's only been in her job 4 months.

EDIT: I should add that we're currently tenants, not homeowners, but our outgoings-to-incomings ratio leaves comfortably enough room to pay all our bills, the loan and have a bit spare so I really don't understand it?!

Apples2

Is she on the electoral roll?

4 Months in a job will satisfy basic requirements (normally 3 months worth of wage slips)...but only just.

sometimes having little credit history is as bad as having a bad credit history (they like to see lots of accounts, all run properly). They will be unable to assign a level of risk if there is nothing to base it against.

It doesn't ring true that she can save £1k per month if you are dipping £500 into an overdraft. The £5k could be saved in just 5 months with no need for a loan (+interest).

Credit scores mean zilch.

pheonixrising21

benweston wrote: »

Morning all :-)

I'm a self-employed web designer with no debts, earn around £25k/year. My wife is a full-time teacher on £22k/year. The only 'debt' we have is about £500 on one of our overdrafts as the last few months have been a bit slow for me work-wise.

We applied for a £5k loan to three lenders in my wife's name (as I'm newly self-employed and it'll hinder more than help, I think) and have been refused all 3.

My wife has a good credit rating (850 on Experian), no previous CCJs, late payments and a guaranteed regular income. Her share of the outgoings amounted to £250/month, leaving over £1k/month spare to pay a £143/month loan!

Any ideas as to why she's being refused?! All I could think was that she's only been in her job 4 months.

Many things can affect why you are refused a loan. Length of time in job for the applicant is one, as is time on electoral role. Lenders like stable people, people in long-term employment living at the same location.
Also, the lack of credit history may have an effect as well. If you have little history to show good repayments, etc, then you are classed as high risk. As an analogy, would you lend £500 to a guy in your local pub? You've seen him there a few times, but you don't know him, you speak to some other people and find out that someone lent him a tenner two years ago which he paid back, but a week later than he said he would. Would yuu lend to him?

Btw, Experian's score means nothing. Lender's do not use it and experian are not a lender. You need to look at the actual credit report (the £2 statury one, not the monthly subscription. Find out what is on there. Is there any fraudulent activity (i.e. loans that you have never had), are you showing as being on the electoral role, are you showing any missed payments. Is the information shown accurate, i.e if it shows missed payments, is this correct (lenders can make mistakes!).

benweston

Apples2 wrote: »

Is she on the electoral roll?

4 Months in a job will satisfy basic requirements (normally 3 months worth of wage slips)...but only just.

sometimes having little credit history is as bad as having a bad credit history (they like to see lots of accounts, all run properly). They will be unable to assign a level of risk if there is nothing to base it against.

It doesn't ring true that she can save £1k per month if you are dipping £500 into an overdraft. The £5k could be saved in just 5 months with no need for a loan (+interest).

Credit scores mean zilch.

The problem was BEFORE she got her job, when she was still studying, and I had to support both of us as well as setting up my business which saw us working at a loss for quite a few months. We've also been unfortunate in having several very expensive car bills recently. Yes, in 5 months she'll have £5k but I felt happier about having a bit of a 'contingency', especially over Christmas and knowing that we'll have a £2k bill for car insurance in a few weeks!

She has had store cards and a credit card before, all paid on time and closed, and she's on the electoral roll.

Apples2

Were any of the three recent applications to her own bank?

They will know her better than any other lender (history of managing her account) so stand the best chance.

With 3 recent searches, an acceptance now will be difficult, it is telling lenders she is desperate for cash. It is generally accepted to wait 6 months after you have had 3 searches against you before applying again.

CLAPTON

forget the 'score'
what do her actual credit files show?
is the elcetoral roll shown there?
is thje OD shown therer?
are any CC or existing credit shown there?


in general, lenders like to see electoral roll, no (or only occasional use of OD), existing CCs well used (i.e. regular use and paid in full) and of course no actual negatives


are you shown as a financail association?
if so then what do your credit files actually show?

Tixy

Is she financially associated to you, or to anyone else? And if so could that financial associate have problems with their credit file?

Does she have any existing credit agreements that are still current (you mention the past cards are closed)? If all closed then how long since the last one was closed.

As Apples says her own bank would usually be the best place to try to start, if they are one of the 3 places already tried, then ideally wait for a couple of months, until she has been employed for over 6months and the overdraft is cleared (if the OD is in her/joint names), and then she could try applying again.

In the meantime if the loan is only to cover the car insurance and if she doesn't have 2 paydays before its due (which would presumably mean she would have enough saved up), then perhaps look for an insurance policy that will allow you to pay over 3months, which will be less in interest than a policy paying over 12months.

iolanthe07

we'll have a £2k bill for car insurance in a few weeks!

This seems extraordinarily excessive, even if it is for two cars. Can you shop around for a better deal?