Loan Acceptance

Melly04

Wonder if anyone can help. I am having problems getting accepted for a loan for £4.5K. I have a FAIR rating, no problems on my report apart from one very small missed payment earlier this year which was annoyingly an oversight on my part and not due to affordability, but I have been declined by two companies despite them doing the soft credit check and agreeing in principle! It is so frustrating as NO-ONE will discuss the reasons why you have been declined, suggesting you call the credit agency. I already have access to my report, which makes it all the more frustrating. I keep explaining I am not borrowing to spend on a car or anything like that, but simply replacing debt that is already on my credit file (which will then be cancelled) with an amount that makes it more affordable for me every month. Has anyone got any suggestions? I am tearing my hair out at the moment. Thanks.

Gaz83

Not enough info. I'm guessing you already have £4.5k of debt, what's your income? Any other defaults / missed / late payments? How much are your debts and to who ?

To put it bluntly, many lenders don't like the idea of consolidation loans as they simply don't trust you won't spend it on something shiny and end up with £9k of debt, or pay it off initially and then rack up the cards again.

Tixy

Have you obtained copies of your credit file from all 3 agencies? It not it may be worth doing.

But as said above a lender looks at the worst case/highest risk scenario that you do not use the money for consolidation and then considers whether they think you could afford to service both the old and new debts

Melly04

Yes I see your point. I do have my credit report. It is probably that I already have that much debt but they aren't interested in the fact the loan is to replace that debt instead of going on a spend. But I guess they have to limit the risk! Just annoying as they won't discuss it with you as to their exact reasons for declining. I also think my salary is probably not high enough!!! Thanks for your comments )

Foxy-Stoat_3

If you have been declined twice then I wouldn't apply for anything else for a least 6 months, use this time to pay down your existing debt and try and pay into a savings account.

Whats your income?

Generally if you NEED money you will be declined, if you don't need the money then you get accepted.

fozmcfc

When it comes to consolidation, it doesn't work for most, as many including myself, just end up running up the debts again, even if it is not our initial intention.

IMO, the persons own bank should always be the first place you should look for a loan, as they will be more likely to know your finances then anyone else. But don't do it online, go in, sit down and explain the situation.

If someone has credit cards/loans with the bank already, they may be more likely to agree, if it is agreed, the money is split to immediately pay off cards and loans, then the accounts are closed, to prevent debt being run up again.

If the bank says no, then it is highly unlikely anywhere else will agree, unless again the majority of the debt is already with that company and the above loan/card closure are agreed.

Thrugelmir

Melly04 wrote: »

with an amount that makes it more affordable for me every month.

That's the lenders concern. Higher rates of interest reflect the higher risk.

ALSO_2

I'll tell you 'my story'

I have been 'drowned' in debts for a good 17 years, mine is a very long story how I got into this mess.

After 17 years I only reduced my debts from 40k to 24k

So...lately I was trying to apply for zero balance transfer cards and/or loans to consolidate part of my debts, I was desperate to reduce my monthly repayments even by only £10 a month.

I have been paying a good £1200 a month towards debts only!!!

I rely on weekly overtime to pay off my debts, thankfully in my job the overtime is guaranteed every week.

In the last 3 to 4 years I have also been working 80% of my annual leave too in overtime as HMRC got my taxes wrong and I found myself with £6000 of tax underpayment!!!

Anyway, I was in the problem described by you all....as I was living to my limit (well, over my limit as I rely on overtime to pay the debts) then any loan/card I applied for got declined!!!

It was just last week I applied for a £6500 loan with Zopa. I didn't even know why I applied as I only just got declined that same day by 3 other lenders! I got to a point of 'I don't care I just apply to everyone now!'.

A Zopa underwrite called me. They asked me MANY personal questions..as you can imagine I was 'embarrassed' to discuss my financial mess but knew I 'had to'. The underwriter was very nice and gave me good advice.

They said to me they could see from my credit file I had over 20K of debts so applying for 'only' £6500 does not look good as with £6500 I could only consolidate 3 to 4 of my store-cards/credit cards, lower my repayments by maybe £50 a month and not make much of dent to my situation....so much so I'd probably get frustrated and use those cards again (the underwrite was right as I did that in the past)

then they said that if I applied for a 20000 or 25000 loan it would look much better as with that amount I could pay off ALL my debts and make a huge difference to my repayments and be 'debt-free' in 3 years from now.

I was not sure when the underwriter first said this to me, I said 'but how do you know I will pay my debts off?' the underwriter said 'you are right, we do not know, however if you did not pay the off you'd find yourself with 50,000 worth of debts instead of 25,000 and you would not be able to afford the repayments' (the underwriter was right!)

I said 'I would never do that', I have ALWAYS paid all of my debts, I have never missed a repayment (they could see this from my credit file).

THey suggested I cancel my £6500 application and put one in to cover 'all of my debts'.

I went home, took out all of my statements and calculated exactly how much debt I had, it was just short of 25,000, my monthly repayments added to approximately £1150!!!

I put in a new application as suggested, spoke to the underwriter too that evening and they wanted my last 3 years of P60 (to show I always earn £23,000 in overtime every year), last payslip (to show my main salary of £42,000 a year), a council tax bill (as I am still not showing on the electoral roll even though I filled in the request twice with my council!) and my bank statement.

I sent all of those documents, the next morning they call me back...more questions....

they kept asking me if I was 'financially associate' with a person who is a good friend of mine (we used to have a join account together but no longer so)

then I received an email in the afternoon saying I got accepted!!!

I could NOT believe it! the loan is over 5 years and the repayments are £535 monthly ( a good £600 LESS than my previous monthly instalments!).

I know if I carry on doing my overtime I can pay off this loan in half of that time (in 2.5 years), so I will carry on doing the overtime and 'get rid of this' once and for all!

NO, I will NOT fall in the 'debt trap' ever again, feeling the freedom of being 'debt free' is too good to give it up!

I took great joy in calling each credit card and store card and loan provider and telling the I was settling my accounts and could they close them!!! they all kept asking why I was closing the account, and blah blah blah (anything to get me to keep it open and keep paying extortionate interest rated to them of 24% and 39%!!!).

So...

for me it was totally the opposite as discussed in this thread, I NEEDED THIS LOAN and I got it, I potentially could have ended up with £50000 of debts, a position I would NOT have been able to handle and only bankruptcy would have been the way out, instead Zopa 'trusted' me, yes well, they did as they had no assurance I was going to pay off my debts, but I did as it was the only sensible thing to do!

Also I have to add that I have 'never' missed a repayment in all of the credit agreements I had, they knew it would have been totally 'out of character' for me not to pay them off (something I have never done in my life and I am 44years old now)

My friend being a 'financial association' through an old joint account was actually 'bringing my credit profile' DOWN as he has a very bad track record (so check if you have an financial associations listed on your file! you may no longer be associated to that person but you have to ask them to remove the record in that instance, my friend is still on my file, I have asked for him to be removed now).