Loan application checks

Mr.Wrong

Hi guys I’ll keep it short,
Had an overdraft facility with safetynetcredit, couldn’t afford it once it reached £500 mark (the interest was all I was paying back each week) they kept offering me an increase in credit limit of which I accepted. Till it was £850 and £1077 owed,
No way could I possibly pay it off each week, it was just covering the interest accumulated in the week.
It’s on hold, and I am in the midst of a complaint where I argue irresponsible lending.

It was linked to my bank so they can see incoming/outgoings each week.
On a Friday when wages come in they would take everything except £50 so I only had £50 - I would have to go straight back into the overdraft to the maximum to cover bills.

They informed me the only check they do is an automated affordability check each month before offering a credit limit increase, in essence (as long as the amount they want is there / I can afford it) without taking into consideration my outgoings.

Questions:
1) should they of credit checked?
2) should they of checked my credit file to see defaults etc?
3) what other checks should they of done?
4) is this irresponsible lending? ( I am aware it’s irresponsible borrowing.
5) with them being able to read-only my online banking and being able to see I had outgoings on certain dates - should they of not offered credit limit increases?

Thank you - all your answers will aid my complaint (if I have a leg to stand on)

I am going to aim for everything whiped clear, if fail, I’ll ask for interest to be erased and interest paid refunded and I’ll pay the outstanding £850.
If fails I will go to the ombudsman

[Deleted User]

No. An overdraft is simply a facility for you to use. If you choose not to use it, you don't pay anything.

If you choose to, you pay for using it.

You may be a high risk customer, but it was their choice to take that risk on you.

enthusiasticsaver

I expect they did credit check and that is why your overdraft is expensive.

Are you saying they should not have given it to you and then increased your limit? Bit of a tricky one because it makes no secret of the fact that they charge high interest so you must have known it was going to be costly and presumably no one forced you to use the overdraft.

Companies like that prey on people who struggle with their finances but there also has to be a certain element of responsibility with the borrower.

To prove irresponsible lending you have to prove that there is no way you could have been able to afford to repay it. I do not think they are obliged to drill down into your outgoings so as the borrowing is relatively low I think you would find it difficult to prove there is no way that you could pay it back assuming you have an income of sorts.

enthusiasticsaver

Have you moved bank accounts now so your wages go into a different account? That would be my next move.

PeacefulWaters

I think you're aiming in the wind with this.

Mr.Wrong

The account is currently frozen to come to an agreement and open my complaint.

Their interest is 0.8% per day per £100 borrowed regardless of credit score. My score at the time was between 0-180 at best and it always fluctuated.

I read that irresponsible lending was also something along the lines of: loaning you money even though the only way to pay it back is to take out another loan...
That being said, some weeks I had to take out another loan just to afford my bills.

Also, the main premise for the complaint I!!!8217;m making is that the increased my credit limit when I hadn!!!8217;t even made a repayment or 6 weeks (payments weekly auto taken) and that clearly showed I couldn!!!8217;t afford it.

I have a record of all payment etc

Though I think I!!!8217;m !!!!ing in the wind I do feel they leant irresponsibly to me. I had a credit score of 0 and many defaults but they still increased the limit.

[Deleted User]

Credit scores are fictional. They're not used for lending purposes.

Mr.Wrong

WHAt about my credit report?

Is there such a list that lenders should tick off when carrying out application or assessments on customers?
Such as affordability, credit check , credit score etc?

PeacefulWaters

Mr.Wrong wrote: »

WHAt about my credit report?

Is there such a list that lenders should tick off when carrying out application or assessments on customers?
Such as affordability, credit check , credit score etc?

There's no requirement for them to credit check you.

Your credit score is irrelevant as its a made up number.

At 0.8% a day it's clear that you've selected a lender that operates at the highest risk end of the market.

Their checklist will be very different from that of a mainstream lender.

Sncjw

You do realise it was your choice to accept it. Also the overdraft interest and charges would be higher if you went over you original limit and hadn!!!8217;t accepted the increase. It would go into an unplanned overdraft.

I think you need to curb your spending to get out the overdraft

Mr.Wrong

Sncjw wrote: »

You do realise it was your choice to accept it. Also the overdraft interest and charges would be higher if you went over you original limit and hadn!!!8217;t accepted the increase. It would go into an unplanned overdraft.

I think you need to curb your spending to get out the overdraft

It’s not like s regular overdraft... it is essentially a loan.
It’s a revolving credit facility overdraft alternative.
I have a limit for example of £100
I can never go over the £100, it’s not a planned overdraft / if I want any of the £100 I put in a request to have it transferred to my bank account which is processed and sent within 15 mins -2 hours.
Then they may offer a increase to £150 etc etc
But they must of never actually checked my affordability when it was on about £600+ because I couldn’t afford it without not paying my other bills.