Not given loan but excellent credit rating!?!

cherry.blossom · 11 January 2014 at 4:45PM

Hi,

I wonder if there is any advice on a situation my husband and I have found ourselves in. I think Halifax have “refused” us a loan to make as much money out of us as possible. They have asked us to come back in 6mths!

We have had to rely on the back up of an agreed overdraft and credit card the last 18mths. It is not that we have been irresponsible or reckless, and we have not made any large extravagant purchases. We have encountered a number of complications within our personal life that has resulted in a lot of added stress to our finances, which have been the main cause of the debts, and increased spending on the credit card. (We had a sick 15mth old child who needed hospital care for 4mths, - I hardly worked during this time, and my husband had to take time off. We also had lots of extra expense -parking, travel, accommodation - had to travel to a different hospital for an op etc. I still had to pay nursery fees to keep the place. Then we have just had problem after expensive problem -car repairs, fences blown over, etc. Also had family members in hospital, and death of a close relative - which also hit our finances for hospital parking, and travel, and looking after remaining elderly relatives -who live 40miles away).

Halifax have so far been helpful, we have an agreed overdraft and a huge limit on the credit card. However, we have decided to start the New Year as fresh as possible, and after being invited in to discuss our finances we were offered a loan to consolidate the credit card and overdraft. It would reduce our monthly outgoings and also save us a lot of money in the long run. However, after completing the process the decision needed to be made by the underwriters - who said not right now - told to come back in 6mths. This means 6mths more overdraft fees, and interest on the credit card.

It is not that we have bad credit ratings, we have checked today, they are 943 & 969- excellent!! We have no other debt other than a car finance.

I do feel that we have been treated unfairly and a very harsh decision has been made. By asking us to wait 6 months, we are going to be hit with more charges that will need to be paid to Halifax, overdraft fees & interest, and also interest charges for the credit card. It appears that by delaying the loan, the only benefit in asking us to wait 6 months is that there will be more charges paid to Halifax, so Halifax can earn more out of us by asking us to wait, whilst still getting a 7 year loan at the end of the “waiting” period. This process is not helping us, it is just costing us much more in the long term.

It looks as though Halifax is using our situation to make money out of us because the charges are going to be £1000.00 over the next 6months – which is what Halifax will effectively earn from our situation.
I just don't understand - we are not asking for anything that we do not currently have – we are already in debt to Halifax by this amount, we are just trying to consolidate it into one and reduce our charges – something that Halifax clearly were not keen to allow.

The poor guy who we were in branch with said he thought the decision was awful, and he suggested we complain & appeal, he said he felt bad as he didn’t expect there to be any problem at all. I have tried a complaint , during which one person on the phone said she felt quite strongly on our behalf and that I must appeal as she said the decision was wrong. However, they have closed it saying they do not feel they have done anything wrong in the process, but told me to progress with an appeal.

I’m not sure where we stand now – I don’t think there would be a problem getting a loan anywhere else, but I want to appeal the Halifax loan agreement. I also don’t know if this is something to take to the ombudsman - that has been suggested to us.
Any thoughts or advice would be really appreciated. I am open to honest opinions also- are we being unreasonable to expect this?
Thanks for taking the time to read this!!

19lottie82 · 11 January 2014 at 4:49PM

Scores are irrelevant. Lenders don't even see them.

Living in your credit card and overdraft will not have helped your application.

Can you answer the following.....

1) what is you annual income? (Combined if it is a joint loan)

2) how much is your existing debt? (As above)

3) are you both on the electoral register?

4) any defaults or late payments in the last six years?

19lottie82 · 11 January 2014 at 4:50PM

Ps if your own bank has refused you, I wouldn't hold your breath for anywhere else I'm accepting you I'm afraid.

Fruit_and_Nut_Case · 11 January 2014 at 4:52PM

Welcome to MSE :wave:

cherry.blossom wrote: »

It is not that we have bad credit ratings, we have checked today, they are 943 & 969- excellent!!

You know that, we know that and presumably your husband knows that. Unfortunately Halifax don't. These are just made-up numbers that are not seen by lenders. They have their own scoring criteria.

Tixy · 11 January 2014 at 4:55PM

If you want to use the loan for consolidation then likely it will be much hard to get a loan elsewhere.

As any other lender will assess if you can afford your existing debts and the new loan on top. Whereas your own bank will be able to insist the money is used to pay off the existing debts.

Generally with a credit application decline you would appeal rather than complain about it, so you could try an appeal. This will mean an underwriter will look again at your application, although it may still result in a decline.

I don't think it is something the ombudsman is likely to look at. You applied for credit and were declined, which of course they are entitled to do so.
And whilst they have said you can try applying again in 6months they are not saying you will definitely be approved then so they are not delaying approving a loan to you just to make a profit.

If you are struggling to repay your existing debts in their current form then you may want to consider speaking to one of the debt advice charities.

cherry.blossom · 11 January 2014 at 4:58PM

Hi Lottie, thanks for the quick reply
Our joint income is £50-60k, the debt is just under £10k, yes we are on the electoral register. We had one late payment for the credit card in Dec - husbands wages paid into bank at a different date so DD failed, was paid as soon as noticed - a few days!
Do you really think there will be problems elsewhere? I don't understand how these things work tbh, but from looking at my credit report in depth it just shows that credit check has been done for a loan - not refused/declined.
Thanks

DCFC79 · 11 January 2014 at 4:59PM

Your credit scores of 943 & 969 entitles you to naff all, they also dont mean you a dead cert to be accepted. Without knowing the reason for decline we can only guess as to why, [STRIKE]ill have a guess and say its the income against the amount of debt you have in conjunction with what your are trying to borrrow.[/STRIKE]

cherry.blossom · 11 January 2014 at 5:02PM

Thanks for the replies - and the welcome

sorry for my ignorance - what is the point of the credit rating if the banks don't look at them - I thought that was what was referred to?

cherry.blossom · 11 January 2014 at 5:03PM

DCFC79 wrote: »

Your credit scores of 943 & 969 entitles you to naff all, they also dont mean you a dead cert to be accepted. Without knowing the reason for decline we can only guess as to why, [STRIKE]ill have a guess and say its the income against the amount of debt you have in conjunction with what your are trying to borrrow.[/STRIKE]

thanks - but why strike this out?

Tixy · 11 January 2014 at 5:06PM

Your credit report detail is what a bank looks at, along with the rest of your financial circumstances and your account history with that bank etc.

The credit scores provided by the 3 credit reference agencies only take in to account part of that information and are an indication as to how lenders may view that information (e.g. they don't know your salary which is obviously a major factor for any lending decision made by a bank).