return from maternity leave - refused a loan?

anuvb

Hi - am new to the forum and am hoping you might be able to point me in the right direction. I have been back off maternity leave for about 5 months now, the first couple of months I did reduced hours to allow time for baby to settle, but am now back up to 4 days a week (down from 5 pre-baby). I earn in excess of £40K even on my PT hours and have good credit rating scores and access to a total potential debt of £11K but only about £300 unpaid. I rarely - if ever - have any debt. Although whilst on maternity leave I did start using a store account again (after a 4 year break) and dipped into my overdraft. These were both - however - paid off in full at the end of each month and I have not carried debt over with me apart from the £300 which will be repaid at the end of this month. I have never defaulted on any payments and have looked after my finances well. I have no adverse financial associations.

I approached my bank about taking out a home improvement loan, as I thought the fact I had been a customer with them for 15+ years would stand me in good stead despite having been away on maternity leave. I passed all their initial checks only to find they then wanted 3 months of pay slips as my pay cheque hadn't been consistent. I explained I had been on maternity leave but that it was now back to what is now my full pay and to prove this I would provide them with not only the pay slips, but also the letter from HR/Finance to confirm the arrangements.

I have since learned I have been turned down for the loan. I have been told I don't meet their (incredibly mysterious) criteria.

So my questions are:

(1) any thoughts on what their real motives for turning me down are?
(2) If it is related to the mat leave can they do this, or is this discrimination?
(3) I don't want the loan now, but how will the refusal affect my otherwise spotless credit rating, and can I challenge this?

Any thoughts, or personal experiences gratefully received.

Tixy

Hi

1) probably down to your inconsistent earnings over the last few months as they said. It could also be hindered by the high amount of available credit you have.
2) its not because you have been on maternity leave its because your income has been erratic or at a reduced level. Its not discrimination.
3) it will show as a credit application search on your file, which any other potential lenders will see. It will not show as a refusal.

thriftylass

How do you need a loan if you earn over 3k a month. Can you not save the money esp if you don't need it right now or are you living in an really expensive area?

What do you mean by you have access to a total potential debt of 11k?

anuvb

Hi thanks for getting back to me.

Tixy - very insightful and helpful. And as I thought - although very frustrating!

Thrifty lass - honestly - I do live in a reasonably expensive area but the truth is I can and will save, it is just that we have some fairly urgent home repairs we need to do on an old property (damp, roof repairs due to god awful weather this year) which I would like to get done (and have been advised to do so) this summer, as they may not last another winter. Savings are diminished due to maternity leave and a loan over a period of say 4 years would have allowed me to do the work, and build up my savings as the loan repayments would have been sufficiently low enough to do this. Access to £11k credit is through my credit card, store account, agreed overdraft. Doesn't mean I use it (or asked for it in the case of the card/overdraft).

I do have options, just was surprised that this one wasn't as available as it used to be. And wanted to see if anyone could shed light on the reasons.

Tixy - I'm not going down this route in this instance, but how long would it be before it would be ok to apply again? Or is that like asking how long is a piece of string?

thriftylass

Ah, that makes sense. Old houses are dear to repair. Sorry thought it was just sth non-urgent. But a damp roof better gets sorted soon. I wonder if you have to wait three payslips of full salary if thats what they asked for last time? Are you on your own, could your partner take it out or a family member help? But I guess you already thought of that.

Hope you find a solution soon so you can get the house fixed for you and the little one.

Tixy

anuvb wrote: »

Tixy - I'm not going down this route in this instance, but how long would it be before it would be ok to apply again? Or is that like asking how long is a piece of string?

No definite answer but I would wait for another couple of months. Get the small debt paid off and don't use the overdraft in that time. You might also want to reduce the available credit you have a bit. If the store card is one with a very high limit and you are never likely to use it then you could reduce that down to a few hundred.

Then you could try applying again, by which time you will presumably have been earning your new salary for more than 3months, should another lender ask to see payslips (which they may well not) unusually in your case applying to your own bank probably hasn't helped, as they have been able to see your income being paid in to your bank and noticed that it varied, another lender wouldn't have that information to then query it.
What sort of amount were you looking to borrow?

anuvb

Initially about £8.5K - have done more than this in the past with no issues so didn't think twice about it (doh).

But this was for a bells and whistles job. Can trim this back to about £5k to cover the immediate issue, and delay the start date to build some of that up by saving like crazy and maybe credit card the rest, not an ideal situation but might need to do so right now. Ironically for me, though it might work out cheaper in the longer run as would be paying off CC bill quicker than the loan and therefore incur less interest. I just won't have rainy day money (ho hum, rainy day, leaky roof... ). The plus side is that I get the satisfaction of knowing my bank make less money out of me this way and there is something satisfying about this thought

Hadn't thought of asking store to reduce credit... will get onto it, and maybe the bank overdraft too as I don't need it and it worries me just having it there. We will need to remortgage next year so I need to tackle this issue quickly and head on.

anuvb

ETA - and it really f**ks me off that I naively thought the bank would be helpful...

bouncydog1

Might be worth seeing if you could add to your mortgage as it is for home repairs rather than other things people borrow for e.g. Holidays, cars etc.

Depending on how the repairs will be carried out e.g. Are the funds for materials it might be worth seeing if you could get an interest free card to cover materials and pay the labour as you go. Not ideal but a possible solution?

good luck these decisions are frustrating!