Do loan companies REALLY take notice of credit report & credit score?

ever_decreasing_circles_2

I applied for a £15k loan, for debt consolidation, yesterday from Sainbury's and after 25 minutes of grilling/answering questions, the lady said she'd let me know straight away if the application had been granted. Result - sorry but not granted. Advised me to check with the major credit reference agencies.

Not deterred I went to the eligibility calculator today on this website and after consideration of advice given (the site said a 50% chance of getting one with them) I went to a company who took full details and after completing their questionnaire, they said they couldn't find a deal for me but said they would direct my call to Moneyway who would call back. They did and after jumping through the same hoops that Sainsbury's put me through I got the same answer, this time the guy on the phone said to check with the CR agencies and named Equifax in particular.

I enquired with Equifax about my file, and after joining for the month's free trial - which I must remember to cancel - I went into both my credit report and credit score. The score is 452 which is above the UK average of 380. I then read the very detailed report and saw not one blemish anywhere.

It is a mystery to me to exactly why my loan applications have been refused.

Anyone out the got an idea of why this may be?? Suggestions gratefully received.

Ebe_Scrooge

Your score is meaningless, it's credit history that counts.


But even with a blemish-free history, there are any number of reasons why you may be declined. Top of the list is affordability. A lender will look at your income, any existing debts, and how much more you're looking to borrow. If you're looking to borrow more than about 50% of your income then most lenders will decline you.


You say the loan is for debt consolidation. I assume therefore that you've already got £15k of debt ? The lender will probably assume a worse-case scenario, where you take a loan for £15k, blow it on a holiday and still retain your existing debts. You therefore owe £30K ( even ignoring a mortgage or anything else ), so unless you earn £60k that's probably why you were declined ( if you also have a mortgage that will only increase the amount of debt you're carrying ).

DCFC79

Well im afraid your score isn't much use, what matters is whats in your credit history.
Lenders don't have to lend to you, some lenders will score you based on your credit history and other factors to determine if they lend to you.

MuddyFunster

I'd bet that you've been turned down because affordability - it's now more important than ever that lenders actually check that you can afford to repay them, and not just base their decision on if you've paid well in the past.


Debt Consolidation loans often fail affordability - no doubt you're doing it to reduce your outgoings, but few calculators take this into account - they'll expect your outgoings to increase!


It might be worth going to a broker - I haven't worked in finance for 5 years now, but I wouldn't recommend Sainsbury's for anyone with less than a perfect credit history and more than ample income - they really are the most risk adverse provider I know of - it's why they offer such low rates!

David301

If you are looking for consolidation it implies that you have a history of spending beyond your means and you are at a point where you need to do something about it to make your life easier. Your credit report may show no missed payments or defaults but it will probably show an upward incline of debt. This doesn't look good when asking to borrow money.