Experian / Equifax - Credit Score

WillyWonga

I used to work for the old Abbey National. The credit score acceptance for loans was a closely guarded secret but we knew it changed on a daily basis. It also depended on day of month and whether targets were being met. After Xmas was a bad time to go for a loan as understandably demand was high and as the limits reached the credit score tightened - applying end of month was bad time as well as thats months allocated pot may have been reached and they were only accepting the creme de la creme of applicants.

Peter_Connelly

WillyWonga wrote: »

I used to work for the old Abbey National. The credit score acceptance for loans was a closely guarded secret but we knew it changed on a daily basis. It also depended on day of month and whether targets were being met. After Xmas was a bad time to go for a loan as understandably demand was high and as the limits reached the credit score tightened - applying end of month was bad time as well as thats months allocated pot may have been reached and they were only accepting the creme de la creme of applicants.

This is very interesting information and, thinking of it, it makes sense. I previously worked in retail and sales / discount tactics also changed daily depending on sale targets.

Peter_Connelly

Mookiedolphin32 wrote: »

I had the same experience also with Santander, I've been in the same county council job for 11 years and been at current address for 9 years . I've had loans with my bank in the past and settled them .
I to have looked at Experian and Equifax and after looking nothing screams out to me .it shows all my settle loans over the past years back to 2005 .
So am also a little bit puzzled as to why I got refused for a loan also .

We should be receiving some proper feedback and not the generic bumf they give which means it could be absolutely anything!!!

Candyapple

Thanks for the responses.

As you don't want to disclose your salary, a general rule of thumb is lenders won't lend you more than half of your annual salary.

So let's say you earn £30k and have £12k total available credit limit and £8.4k debt. (70% debt to credit ratio). If you wanted to take out a loan of say £9k to clear the debt, you would need to be earning circa £42k plus.

Other factors which might have affected you - as you are on the electoral roll this is good, however most lenders prefer 3 years+ to show stability.

As your debt to credit ratio is quite high, this also works against you as a lender might view it as you are too close to your limits already.

Peter_Connelly

Candyapple wrote: »

Thanks for the responses.

As you don't want to disclose your salary, a general rule of thumb is lenders won't lend you more than half of your annual salary.

So let's say you earn £30k and have £12k total available credit limit and £8.4k debt. (70% debt to credit ratio). If you wanted to take out a loan of say £9k to clear the debt, you would need to be earning circa £42k plus.

Other factors which might have affected you - as you are on the electoral roll this is good, however most lenders prefer 3 years+ to show stability.

As your debt to credit ratio is quite high, this also works against you as a lender might view it as you are too close to your limits already.

Cheers Candyapple.


With regards to salary, I was wanting to borrow about 1/3 of my salary, over 5 years. The Electoral roll is always "yellow" on my Equifax data as I have moved a fair bit these past 5 years... lol. I have now bought and settled.


The debt to credit ratio confuses me, particularly as I was wanting to consolidate (for a much lower monthly premium) so it seems like it's a case of I am damned if I do and damned if I don't.


I've often wondered if applying for a loan to consolidate other loans is frowned upon to lenders?


Cheers,
P

Candyapple

The problem is with taking out a loan to clear your existing debt is quite simple, and as I explained in my rough formula above.

Using the example of figures I gave, the problem lenders have is they have no way of knowing whether you would pay off your cards and close down the accounts, or just clear the cards and run them up again, so if that happened you would end up owing £17.4k, as opposed to just £8.4k and more likely to default on your repayments. Hence why ideally you need a low-ish debt to credit ratio and if you are wanting to borrow a large amount to clear your debts, you would need the high salary to cover it plus the existing debt (see formula).

As an aside, if you have a high salary, why are you not throwing more money towards clearing off your debts to negate the need for a loan? If your reliance on credit is high, you might want to visit the DFW board and post up a statement of affairs for people to guide you into where you could cut back in order to pay off your debts quicker.

Peter_Connelly

Candyapple wrote: »

The problem is with taking out a loan to clear your existing debt is quite simple, and as I explained in my rough formula above.

Using the example of figures I gave, the problem lenders have is they have no way of knowing whether you would pay off your cards and close down the accounts, or just clear the cards and run them up again, so if that happened you would end up owing £17.4k, as opposed to just £8.4k and more likely to default on your repayments. Hence why ideally you need a low-ish debt to credit ratio and if you are wanting to borrow a large amount to clear your debts, you would need the high salary to cover it plus the existing debt (see formula).

As an aside, if you have a high salary, why are you not throwing more money towards clearing off your debts to negate the need for a loan? If your reliance on credit is high, you might want to visit the DFW board and post up a statement of affairs for people to guide you into where you could cut back in order to pay off your debts quicker.

Ah, right... yep, I get it


I was using the loan to clear debts and make home improvements... when applying for the loan I couldn't select both.

We have decided now to just do the work we want over time and clear more of the debt. Credit cards are just a portion of it, I did take a loan out for a car which I also wanted to clear.

Thrugelmir

Peter_Connelly wrote: »

I've often wondered if applying for a loan to consolidate other loans is frowned upon to lenders?

Frowned isn't the right word. More concerned. Consolidation provides an answer not the solution. As many people simply go onto to borrow yet more. Without addressing the reasons behind why their debt just carries on increasing.

Lenders receive datasets from the CRA's. Which enables them to detect trends, minimum repayments, 0% credit cards. All of which helps create a fairly accurate profile as to the nature of the borrower when it comes to finance matters.

Peter_Connelly

Cancelled both Experian and Equifax... ahhh

NorthernMonkey83

I find the credit scoring system is completely flawed.

I remember the program 'Bank of Dave' were he lent money to people who he properly assessed were fit for lending ie giving only the amount they needed the money for. This highlighted just how the relationship between the banks and lenders was significant back pre credit scoring and personally how it should be.

I've had a lot of dealing in the Financial Sector and how on earth some people were given credit in the first place is beyond me... Issues with language barriers (do they understand the T&Cs), people in unstable jobs, and not to mention people unemployed being given credit.

I say bring back 'proper' lending, ignore the credit scoring, let the banks do a proper asessement of your current and long term probability in regards to their lending procedure.