Need a Loan?

DCFC79

BenjaminClarke wrote: »

Yep, I get that. But the fact Tesco Bank searched my file will have a bearing when we apply with another lender... will it not?

All other lenders will see is Tesco Finance did a search, nothing more nothing less.

BenjaminClarke

Pixie5740 wrote: »

Then stop talking about your excellent credit score. One search on your credit file isn't going to make that much of a difference to lenders. Your £5k of credit card debt and how you manage that as well as your affordability will be much more important.

Do you really need a loan? Couldn't you just snowball your credit card debts rather than just shifting your debt from one creditor to another?

You keep bringing up the score! I mentioned that it hadn't effected my score but I know that means nothing. It was just an observation... understand? I could snowball my credit but we might want to buy a house any time, if the right place becomes available so having all of this snowball credit wouldn't be good for us. I wanted a loan if the interest rate was right, if it's not right then I will do something else. I am not stupid you know.

BenjaminClarke

DCFC79 wrote: »

All other lenders will see is Tesco Finance did a search, nothing more nothing less.

Yes and does that have a positive or negative effect? As a lender might they look at that and wonder why Tesco Bank searched our files and we didn't accept. If the loan application process was more personal you could explain this. It's not though and I have been told by banks and by credit agencies that searches have a detrimental effect on your credit file and that you should only apply for credit every six months. Can you please confirm instead of being so vague? This forum is like the vague society!

DCFC79

BenjaminClarke wrote: »

Yes and does that have a positive or negative effect? As a lender might they look at that and wonder why Tesco Bank searched our files and we didn't accept. If the loan application process was more personal you could explain this. It's not though and I have been told by banks and by credit agencies that searches have a detrimental effect on your credit file and that you should only apply for credit every six months. Can you please confirm instead of being so vague? This forum is like the vague society!

I cant confirm as I'm not in the know but I'm sure you can find someone in the know. Tell the FCA or FOS your concerns.

BenjaminClarke

Pixie5740 wrote: »

Then stop talking about your excellent credit score. One search on your credit file isn't going to make that much of a difference to lenders. Your £5k of credit card debt and how you manage that as well as your affordability will be much more important.

Do you really need a loan? Couldn't you just snowball your credit card debts rather than just shifting your debt from one creditor to another?

FYI

I have had my credit card for two years and never missed a payment. Same goes for my partner. I can show you if you like? I have no other debts at all. That's why I found Tesco banks decision strange. 15.8% is a joke, hence why I tore up the agreement as soon as it arrived. I was honest with Tesco about what the loan was for - to clear these credit card debts so we could cancel the cards. I think Tesco used this information to charge us higher interest, they probably thought we were desperate, which couldn't be further from the truth. We pay £100.00 a month for our credit cards, our only debt. It's not an issue for us. We were on a 0% deal, which ran out a while ago and so now pay 18% interest, which bothers me. Rather than "snow ball" like you suggest we thought a loan would be less detrimental to our credit files and easier to maintain. 3.4% was a fair offer, I'd have probably gone as high as 9%, half of what we pay for our credit cards but 15.8%... no chance. Obviously I am bad with money though and don't know what I am doing as suggested by members of this forum.

Conclusion: I think Tesco Bank looked at our files and thought we were desperate to clear the credit cards and so if they offered us just below the interest we currently paid that we'd take it. Wrong! I know a bad deal when I see one and what Tesco were offering was a joke based on assumptions.

That's fine, I have the choice at the end of the day. What I gripe about, again, is the fact it took them two weeks to process the application and that their search will have a negative effect on my credit file. Happy that I used file instead of rating or score? Does that satisfy you? Now can you give me some helpful advice? I am guessing not.

Pixie5740

I'm glad that it has finally sunk in that you don't have a universal credit score and that how the credit reference agencies rate you as a borrower doesn't matter.

Suggesting you snowball was helpful advice. If £100 is so easy for you to pay why not pay £150 or £200 and get the cards paid off quicker? Otherwise it will take you 91 months to clear the balance and you'll repay over £4K in interest.

BenjaminClarke

Pixie5740 wrote: »

I'm glad that it has finally sunk in that you don't have a universal credit score and that how the credit reference agencies rate you as a borrower doesn't matter.

Suggesting you snowball was helpful advice. If £100 is so easy for you to pay why not pay £150 or £200 and get the cards paid off quicker? Otherwise it will take you 91 months to clear the balance and you'll repay over £4K in interest.

That's definitely an option we are considering. We could easily afford it and I certainly wouldn't go 91 months to clear the debt! That'd be very stupid and I'm too tight. It might seem strange to you perhaps but we thought a loan would be simpler and still work out financially better for us in the long run. Obviously depending on interest rates. We'll see though, I am looking at all avenues to settle this debt quickly as we don't even need the cards anymore, we don't want credit of any description until we get our mortgage, whenever that time comes.

Here's another question for you: say we apply for a mortgage this time next year, does it look better to have an outstanding loan or outstanding credit cards on your credit file?

Pixie5740

It's six and half a dozen. The outstanding balance of either will impact your affordability. As long as you're making your repayments on time it doesn't matter whether you're repaying a credit card or a loan. Overdrafts don't look great though.

BenjaminClarke

Now there is some good advice I can use! We have an overdraft of 5000 quid. We never go into it and kept it for peace of mind but I'll cancel it now I know that it could count against us. Thanks.

Pixie5740

Having an overdraft isn't necessarily an issue (although £5k of available credit might be a factor) whereas dipping into an overdraft on a regular basis doesn't scream good money management.