Applying for Credit

StanVanDamn

Hi everyone,

Back in August/September my credit score was showing as Poor and I have tried my best for the last 6 months to overpay debts as best as I can.

I have since reduce my debt from around £14000 to £9500

My credit score is now showing as good.

I applied for a loan in November and was rejected straight away. I thought I would try again today being as Ive improved my score so much and was rejected again.

So my question is - if I have been rejected for credit in the last 3 months is this going to effect future applications to the point where loan companies will not even touch me?

Thanks for your help

OneLife_OneShot

Most credit scores will be irrelevant when applying for a loan, it all depends on how much you earn and what other debts you have.

Have you got any defaults or CCJs either?

BugsyBrowne

StanVanDamn wrote: »

Hi everyone,

Back in August/September my credit score was showing as Poor and I have tried my best for the last 6 months to overpay debts as best as I can.

I have since reduce my debt from around £14000 to £9500

My credit score is now showing as good.

I applied for a loan in November and was rejected straight away. I thought I would try again today being as Ive improved my score so much and was rejected again.

So my question is - if I have been rejected for credit in the last 3 months is this going to effect future applications to the point where loan companies will not even touch me?

Thanks for your help

Forget your score from Experian or Equifax its their way of making money out of the gullible especially as they don't lend money nor do lenders give a damn what they've scored you.

Apples2

You're still £9.5k in debt even though it is going in the right direction (or rather WAS going in the right direction until you applied for more debt).

DCFC79

Stop applying for credit and concentrate on paying the debts off.

poppasmurf_bewdley

If, as you say, you had a bad/dodgy credit rating in August/September this year, no amount of tinkering with your affairs will make you a good credit rating only three or four months later.

Would you trust a bank robber four months after his last robbery just because he hadn't robbed any more banks?

I'm afraid it will take a year or three of keeping your nose clean before lenders will begin to trust you.

pheonixrising21

poppasmurf_bewdley wrote: »

If, as you say, you had a bad/dodgy credit rating in August/September this year, no amount of tinkering with your affairs will make you a good credit rating only three or four months later.

Would you trust a bank robber four months after his last robbery just because he hadn't robbed any more banks?

I'm afraid it will take a year or three of keeping your nose clean before lenders will begin to trust you.

Surely that depends on the reason the OP was declined for the additional credit? If they had a bad/dodgy credit score due to missed/late payments, then I would agree with you completely. However, if the bad credit rating is gained solely from high current borrowing and high actual debt to available debt ratios, then reducing debt should help.

But as is said here many times, the CRA's credit scores mean nothing and have no relation to the credit rating systems used by each lender.

OP, why do you need additional credit at this time? You have reduced your debt by £4.5k in 6 months, so in 12 months you'll be debt free anyway? Are you trying to consolidate your debt(s)? many people on here will try and persuade you not to do that, due to the temptation of just running up the debt again instead of paying off the old debt and stopping. if you are consolidating that £9.5k, the lenders will assume that you won't pay off the debt and then work out if you can afford to maintain the full £19k debt (£9.5k current debt + £9.5k to consolidate).

Also, what is actually showing on your credit report (not your rating/score, the report itself). Are you on the electoral role? Have you have CCJ's, missed payments, arrears? Are there any credit agreements on there which are not yours (i.e. fraud/identity theft)?

IMO, its down to your own will-power as to whether you want to consolidate or not (if that is why you need to additional loan. IMO, its not really the MSE way to pay a higher interest rate if you can get a lower one, is it? But you need to be sure that you will pay off the old loans/CC's and cancel the account so you cannot re-use them.

I've said this before (and I'll probably get shot down again for saying it again), IMO lenders can do more to help people consolidating. Presently, when you get a consolidation loan, the new lender gives you the cash and hopes you do as yu promised and actually pay off the old debts and close them down. They have no guarantee on this, you could buy a new car or go on holiday with the cash and double your debt.

What should happen is that the new lender doesn't give you the cash, but instead pays off your old debts for you, in the same way a car dealer does when you trade in a car with outstanding finance. It must be fairly straightforward. Banks manage this type of multi-organisation communication when they offer a current account switching service and like I said ca dealers do it all the time.

Not advocating consolidation here, unless you have cast iron will, but certainly the lenders can make it easier for people who want to do this.

poppasmurf_bewdley

pheonixrising21 wrote: »

Surely that depends on the reason the OP was declined for the additional credit? If they had a bad/dodgy credit score due to missed/late payments, then I would agree with you completely. However, if the bad credit rating is gained solely from high current borrowing and high actual debt to available debt ratios, then reducing debt should help.

What you say would only help if the means of getting that high borrowing and debt was permanently removed. If it wasn't, then the OP could go back to his old ways and increase his debt again once he got a loan. Lenders are wise to all these tricks, which is why the OP hasn't got his loan.

pheonixrising21

poppasmurf_bewdley wrote: »

What you say would only help if the means of getting that high borrowing and debt was permanently removed. If it wasn't, then the OP could go back to his old ways and increase his debt again once he got a loan. Lenders are wise to all these tricks, which is why the OP hasn't got his loan.

That is a point, and further strengthens my arguement for consolidation lenders not to give money to their customers, but rather pay off their debts directly and close the accounts on their behalf. The borrower would not be increaseing their debt, they would just be swapping multiple credit products with varying interest rates over varying terms into one product with a fixed payment and a fixed term. The borrower would have to make sure that it was worth while over the long term to do this

In my case, £7,500 is the amount I would need for a consolidation loan. This is usually the point where the best interest rates are offered. Below £7,500 are usually higher rates. I would love to borrow £7,500 over say 18-24 months @ 6-7% APR. I've not even attempted to do this as I know I would be rejected as the lenders would see this as £15k debt, but not if they paid my debts for me and gave me any left overs in cash.

On the whole, this would save customers loads of money. Well, the ones with alot of debt but always pay it (like me!). Oh, now I see the problem... if it saves us customers money, the banks (collectively) lose out. However, the first bank to offer such a service would make a killing... especially if they target people like me with a fairly large debt but always make the payments

StanVanDamn

Phoenixrising - I have been reading your last post with interest and what a great idea it would be if debt consolidation loans were paid straight to the existing debt. I wonder if it will be done in the future.

DCFC79 - I wish that finances were as simple as that and I could just pay my debts today.

I want to arrange a debt consolidation loan to get all payments under one roof. I also have a credit card in my debt which is on a nasty 22% APR and is charging a lot of interest

Just to give you a bit of background on my credit report - never had a missed payment in my life. I have 3 mortgages which I pay on time every month. The only negative thing against me is the existing debt against my name. Never had CCJ's etc.

iolanthe07

what a great idea it would be if debt consolidation loans were paid straight to the existing debt. I wonder if it will be done in the future.

It used to be done in the past, so I don't see why not. Maybe because lenders' profits rely on people getting themselves overstretched?