Been offered a loan, but want to decline it - credit rating issue?

ammaco

Hi,

I applied for and have been offered a loan from The Yorkshire Bank. The amount of APR is higher than I expected. I've not accepted the loan yet so If I applied to another company to try and get a better deal on the loan would it cause a issue with the credit scoring?

The loan is to clear off my credit card debt, the APR on the loan is still lower than the APR im repaying on my credit card (s)


Thanks to anyone who can help x

tom1984

Nationwide let you do a soft search for a loan, they give you an APR % on your info without a credit search and only do a hard search if you accept the rate. You can apply on line too

rabbit_burrow

Agree with doing the soft search with Nationwide.

As far as your rating goes, once you have applied for a loan etc the search gets added to your file. If you apply for another loan, the new creditor has no idea that you have not accepted the previous loan so it may decline to lend you money, especially as the searches would be so close together. Lenders will see you as a higher risk.

If Nationwide quote you with a higher APR, then you have to make the decision whether to accept your previous offer or not.

If you do accept it, I would suggest working out the difference between paying your credit cards within the time that you were quoted in the loan (to get a monthly repayment figure) and put that difference in value into a savings account each month, then you can pay the loan off earlier.

Poorcouple

What would happen, in theory, if you accept the loan, pay off your credit cards, and in 6 months get another loan with better apr?

You-kip

Poorcouple wrote: »

What would happen, in theory, if you accept the loan, pay off your credit cards, and in 6 months get another loan with better apr?

The more credit searchers the higher the APR!

Tixy

Poorcouple wrote: »

What would happen, in theory, if you accept the loan, pay off your credit cards, and in 6 months get another loan with better apr?

Do you mean what would happen to their credit file?
There would be a new credit application search for the new loan, then the new loan would appear in the accounts section and the first loan would show as being paid off early in a lump sum.
That wouldn't particularly have a good or bad effect on the person's credit file. Though in the short term it could make it slighly harder to get credit.

In practical terms it would never be a good idea to rely on being able to get a cheaper loan, as it may be that a individual is unable to.

Cycrow

it doesn't matter if you accept or decline the loan, the credit search has already been done.

one search shoudln't really have much effect, lenders tend to expect people to shop around so a credit search or 2 would be fine.

but what would happen if you went for another loan and was then offered a higher apr than the one you declined ?

might be worth waiting on the first one until you get a result back on the 2nd so you can then choose the lowest.
i wouldn't try more than 2 thou, as the ones after that could start to be effected

Poorcouple

My thoughts were that this loan would consolidate multiple other debts. If OP was to accept this LAN nd pay off the others, in a few months time his credit file would be tidier. He also benefits from 6 months or so lower interest rather than refusing this loan now, and not getting a better offer later.

Just thoughts though, I'm not an expert so my theory is not advice. More of a question I guess.