How to Improve Loan Affordability Score?

sourcrates

If you have 10k saved you only need to borrow another 13k for whatever purpose you have intended for it.

That would be a more realistic proposition.

paddyandstumpy

Earthwrm wrote: »

For a number of years now I having been planning to apply for a large loan - £23K over 7 years at around £300 per month. As a result I have consistently saved £300 per month into an ISA for about 5 years to prove that I can afford the payments.
...

Earthwrm wrote: »

Sorry, I didn't write that very clearly. My income is around £21-22K (as in around half of £50K). My current savings are £10K.
...

Check your maths. The two highlighted bits contradict each other.

Regardless, if you want a £23k unsecured loan on a £21k salary I'd say you'll struggle.

adamditz

That was the first thing i noticed, £300 a month for 5 years is 18k - if you’ve only got 10k savings (9k if you minus the credit card debt) that means that you’ve had to go back and take exactly half of that 300 a month back out, meaning that in reality what you can afford is 150 a month

Earthwrm

Hi John-K and sourcrates - I'll need £23K in addition to my savings for this project. I've just delayed applying for the loan until I'd be needing it as it enabled me to increase my budget by £300 every month I held off. I figured once I had the loan my 'spare' £300 would go to paying that off and my total pot would no longer increase.

Hi paddyandstumpy and adamditz - All my expenditures for the project have come out of my savings so far - that's what I'm saving for after all, which is why the maths appear not to add up. I'm not using it to pay my gas bill or anything and I have kept a comprehensive diary of what money has gone where. Shame that doesn't seem to mean anything. £400 of the credit card bill is my monthly food shop, the remainder is an unexpected car repair and that goes down by £300 per month as I pay off £700. It would have been gone soon - as it happens it's all gone now on the advice of previous posts. And I can comfortably afford £300 on top to the savings per month on my salary.

I have learnt now that I am unlikely to get my loan, which is tough to accept but there we are.

Herzlos

What's the project? What are you trying to achieve/do with the money that is relying on needing to borrow so much of it?

MEM62

Earthwrm wrote: »

I have learnt now that I am unlikely to get my loan, which is tough to accept but there we are.

Depending on what the 'project' is there may be other ways of financing it. If you provide the details you may get some useful advice.

Sncjw

Ask yourself this would you loan 23k to someone who only earns 21k. You wouldn!!!8217;t would you:

Is the isa a help to buy isa?

Pixie5740

Your savings do count for something, they mean that you can borrow less money. However, as you've found out savings accounts are not reported to the credit reference agencies.

Are your current account and ISA with the same bank/building society? If so you could apply to them for a loan because they can see how you manage your money. Loan decisions aren't just down to credit history, lenders also take into account affordability and past dealings with them as a bank/building society.

If you are budgeting correctly then you should have an emergency fund set aside for times when you have an unexpected expense, such as the car repair bill you mention, so that you don't have to use credit cards or dip into other savings.