Unable to get a loan. Considering Options

mikemikemike123

Hey All

Firstly, thank you for taking the time to read this.

In my younger years i racked up a terrible credit score. Since then i have been doing my best to repair it. I am currently in a job that pays well but need to consolidate a family loan, an overdraft facility and a credit card, i also need money for some urgent purchases.

All in all in need to borrow about 10k with an experian credit score of around 700.

Unfortunately due to my low credit score i am unable to get credit anywhere at a rate below 40% APR. I have though been offered by one of my parents to gaurentee/create a joint loan.

unfortunately guarantor loans also have very high APR which i'm actually quite surprised about. and i'm also quite concerned that having a joint loan will hurt my parents credit score, also concerned it will also get rejected.

are there any options i'm missing out on? my income to maintain and pay back the lone isn't in question, nor is my ability to find another well paying job.

I do not have any property to secure the loan against.

any feedback would be greatly appreciated.

Thanks
Mike

Westminster

Steer well clear of a joint loan with your parents as it will create a financial association between your credit file and theirs which sounds like it will be detrimental to them.

Brock_and_Roll

If you have a good income with spare cash to pay back the loan, how come you have credit card debt and an overdraft?


- this is not meant to sound rude, but this is how banks will look at it.


- what purchases are sufficient urgent to warrant getting further into debt for?


- if your family are willing to act as guarantor (very bad idea, don't do it) surely they would be amenable to rescheduling their loan to allow you to concentrate on getting rid of the external debts first?

mikemikemike123

Hey Brock,

thanks for the response.

The issue is i have a good income but after some issues on holiday with healthcare, and a very lax attitude to handling money as i grew up, i have got myself into a bit of a debt crisis.

in regards to purchases, i need to get some clothes as i'm starting to look extremely tacky for someone who works in investment management. and i need a new laptop.

the more i am looking at joint loans the more i am moving away from them as it is not fair for my parents credit history to be affected by my bad decisions. Saying that, is there any way to get a joint loan that does not affect the other parties credit score?

all in all i just need to find a lender that will actually take into account my problems and not just judge me on a credit score, but this seems very much like a fantasy.

any suggestions are more than welcome

thanks again
Mike

[Deleted User]

No one will judge you on your credit score - as no one sees it. But they will judge you on your credit history.

mummymandy

Can you get a refurbished laptop that's new to you? How about looking in charity shops for a designer suit? Even with a dry clean it would be cheaper than a new one. Good luck with your quest to get out of debt.

iolanthe07

I'm afraid that they will judge you on your credit history because that is all they have to go on when making a lending decision. Could your parents lend you the money at low or no interest?

Pixie5740

Lenders don't judge you on your Experian credit score, hell lenders can't even see your Experian credit score. It what's on your credit files that's important. Lenders are looking for are patterns in order to assess you as a borrower. Do you make your repayments on time? Are your credit cards and overdraft maxed out? Do you rely on short term borrowing such as pay day loans? Those sorts of things. Unlike when Experian make up their score for you, lenders also take into account affordability and past dealings with them which can go back much further than the 6 years worth of data held by the credit reference agencies.

So whatever it is, the data on your credit files, affordability or past dealings with the lenders you've applied to they just don't seem to think your worth risking money to at a half decent rate. I'm not sure how them knowing about your problems would help your case because if you are on a reasonable income you shouldn't be in a "debt crisis" struggling to afford clothes for work even with some issues on holiday with healthcare.

Any joint financial product you get with someone will financially link you, there is no way around that. So I think you need to forget trying to get a joint loan with a parent and you'll just drag them into your financial mess. I'm not sure why you find it surprising that guarantor loans come with high interest rates. Guarantor loans are for desperate borrowers whose only option is a guarantor loan because no other lender will touch them with a 10' barge pole.

I think your best option is to put together an honest statement of affairs and head over to the Debt Free Wannabe board because you can't borrow your way out of this.

Do you need a new laptop? What's wrong with the one you currently have? Can it be upgraded? If it's needed for work shouldn't your employer provide you with one or are you self-employed?

foxy-stoat

List your current debts as I think you need to be aiming lower than £10,000.

Your family loan (assume interest free) should be paid back over the longest time, no point in paying back something that you cannot afford and paying interest as well.

Work to clear your highest interest rate first and over pay where you can, can you sell stuff, down value your car and not buy a new laptop.

Pay no attention to your credit score, its meaningless to lenders.

If your still thinking about a joint loan then just demand that your parents take out a reasonable loan in their name only and you pay it back - this is also a bad idea but far cheaper than taking out a guarantor loan and defaulting.

Ebe_Scrooge

mikemikemike123 wrote: »

Saying that, is there any way to get a joint loan that does not affect the other parties credit score?/QUOTE]


In a word - no. A joint loan will automatically create a financial association between the 2 parties. The only possible way around it would be for your parents to take out a loan in their own name, then give the money to you - with whatever arrangements to pay them back you all deem to be reasonable.


( And it's been said already, but please stop looking at your "score". It's your history that's important ).


However, I would strongly advise against this. This forum is littered with stories of how lending money to friends and family has gone horribly wrong. With the best will in the world, who can say what your employment situation will be in 6 or 12 months time ?


I think the suggestion from MummyMandy is very sensible - some excellent clothes can be found in charity shops ( I have several very nice shirts myself that I've bought from these places in recent months ), and do you really need a brand-new laptop ?

Arleen

My advice would be that if you need to buy those items then, for the duration of this month, do not spend money on anything but necessities (so no nights out, no PPV, etc. ). Since you are I a well paying job, that should leave you with enough money for a nice suit next month.
In a similar fashion, if you need a new expensive laptop, save for few more months and buy it with cash. When you will have to make those sacrifices before buying something, I am sure that you will reevaluate cheaper alternatives.