Good Credit file - Poor acceptance rates

Shunter

After trolling these forums for many years there has now come a time where I really need some help.

I have recently applied for a loan which was accepted but unfortunately not for 'the advertised rate', in fact it was 18% instead of 6.7%.

Can anybody explain why I got accepted at such a poor rate and why whenever I use the softsearch tools I am always in the "10-20% likelihood of getting accepted on a "good card".

I am relatively young with a solid credit file, no defaults. I have a credit card which is currently at its maximum of £500 and has been for several months but I do pay off around £250-£300 per month which I then re-use. I have never missed a minimum payment. I also have a £2000 Overdraft which is at its limit by the end of the month. This overdraft was interest free until August this year but now I pay interest on £1000 of it.

I earn a good income >£20000 per year and am baffled by my "high credit risk. Everything on my report is up to date, I am on the electoral role, been with my bank for 4 years. 2 different homes in the last 5 years.

Please can someone explain where I am going wrong, the only thing I can think of is that I because I am in quite a large debt (my overdraft) of which was interest free, the banks are making no money from me which doesnt make me an attractive customer. Would this be correct?

Thanks

Tixy

Is this a loan with your own bank, or a loan with a new company?

They may be assessing you as a higher risk due to the fact that if you max out your overdraft each month that they are not certain where you will get the funds from each month to make your loan repayments.

That coupled with the fact that you max out your other source of credit, the card, could well be enough to place you in a higher risk category than someone with a similar credit history, income, credit accounts but that only uses a small amount of their overdraft occasionally and only uses their card for say £100 a month which is then paid in full each month.

Is this the first place you have applied to for this loan?

You-kip

Only 51% of applicants get the advertised rate, based on your credit file they have seen you as a higher risk hence the APR.

Asking on here why you got that rate is like asking for Saturdays lottery numbers no one will know why you got that rate.

Shunter

I have only tried the once and it is a bank that I have a joint account with. The thing that concerns me is that the soft search gives the same results therefore I would expect to get te poor rate with another bank.

I am not asking why I got that specific rate but why I am seen as a credit risk.

You-kip

Shunter wrote: »

I have only tried the once and it is a bank that I have a joint account with. The thing that concerns me is that the soft search gives the same results therefore I would expect to get te poor rate with another bank.

I am not asking why I got that specific rate but why I am seen as a credit risk.

People who've never missed or been late for a payment in their life are not guaranteed the best rate it's all down to the computer and that's it.

It could be your Age it could be relatively short credit history could be anything.

I also wonder why you only have a very small credit limit!

soontobemrsg

I agree with Tixy and it's very possible it's because you use 100% of your available credit every month.

Consider trying to reduce how much of your credit you use every month either by spending less or increasing the limits - though if the latter don't fall into the trap of reaching the new limit - it's not a target you know!

TheGenerus1

Shunter wrote: »

After trolling these forums for many years there has now come a time where I really need some help.

Thanks

Are you trolling now?

Shunter

Thanks all.

It does make a lot of sense that the fact my credit being maxed out is probably a negative. Age is probably also against me after only being in employment for just over a year following university. It sounds like time will be the best option and in that time reduce the overdraft by a good amount.

LeeSouthEast

Joint account.

You are financially linked with someone else? So what's their credit report like....

FLAPJACK

Anyone want Saturdays Lottery numbers..........?