My loan application saga and Nationwide's Soft Search

nardocott

My partner and I had been thinking about having a small extension on the back of our house but because of the cost we would have to either wait a couple of years (to save up) or borrow the money to do the work now. As we had good credit history we thought taking a loan might be a good idea so we looked around a bit, read about the hard and soft searches and that we shouldn't apply to too many places at once etc.

So first stop was the bank, where we have our mortgage and have both been customers for 10+ years. Went through the motions and then found they offered us what I thought was a bad rate (9.9% on 15k over 5 years). So we left it and decided to apply with Sainsburys as their headline rate at the time was ~5.2%. When I went through their online application they gave me the indicated APR of 5.2% but when I got their letter in the post it was 7.4% - much better I thought. I also did a soft search on the nationwide site before the sainsburys one but as they had offered me ~6.2% I wanted to try Sainsbury's first and thought I might get some nectar points or some reward with it. After I got the Sainsbury's paperwork I said no thinking I could go back to the Nationwide but found that their rate had gone up to 12%!!

I figured at this point that clearly I had done too many searches too soon (the two applications and Nationwide's soft search were over a 2-3week period). So I decided to wait a month or so before doing anything else hoping it would sort itself out. My partner and I also took out free subscriptions to checkmyfile.com to see what was logged and check our ratings were OK. When we did this we found that even though we had moved back in September and I had made sure we registered on the electoral roll none of the agencies had us on the electoral roll!

I got the paperwork and sent it to all of them (it confirmed we were on the roll as of October 2012!) and got the default response that it would take up to 28 days to sort (one said 6 weeks). It took pretty much all of the 6 weeks to get all of the agencies correct meaning we have to pay for a round of credit files as we had used up our free one month subscriptions.

Once that was finished I went back to Nationwide to do a search and yes I got the 6.2% again. Spoke to them over the phone and decided I would open a flex account as well as this might give me a better rate (headline rate is only available to Nationwide customers). I couldn't do it that night and figured I wasn't doing any other searches or checks int he mean time so I completed all of the forms the next day. When I had opened the account and went back through the application the rate had gone back to 12%! I spoke to them on the phone again and after a couple of calls (they had to go and speak to other departments to find out what was going on) they said that because I had gone through a search with them it was being logged and counted against me. If I wanted to get their better rate I would have to wait 3 months (they suggested 6 initially to let everything settle) so I told them I wasn't interested. Apparently if I had done my application on the phone it would have been valid for 30/60 days but their internet soft search is only valid for 1 day. I even pointed out that their "reopen application" button wasn't working which is why I had to re do the application each time and they said it was a known bug!

So as I guess most people know but hopefully this will be of some help to someone ,before taking out a loan:
1) Make sure you do a credit search and if there are problems sort them before applying anywhere as it will only delay your application (electoral roll added about 30 points to both mine and my partner's scores)
2) Don't think your bank will give you a good rate
3) If you are going to use the Nationwide soft search it is best to be in a position to accept it there and then as it isn't soft when it comes to themselves and you can't currently retrieve it later.
4) Sainsburys online applications don't tell you the rate you will be offered until the paperwork arrives

So, hopefully this will be of use to someone of what NOT to do when looking for a loan but also beware of the so called soft search with Nationwide.