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Any advice on applying to a Post Office loan with a low credit score

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Whomas
Whomas Posts: 7 Forumite
Hi there,

My first post on this site so apologies if its been asked before

I'm looking to apply for a loan from the Post Office, I currently have a loan with my bank Natwest at around 20% but the Post Office loan in comparison is 3.4% which i plan to use to pay off the Natwest loan with in full, lowering my monthly payments

The issue is that my credit score is pretty low

Clear score has offered this Post Office loan to me with a "70%" success rate based on a credit score of 239 out of 700 and all my other personal factors

Anyone with similar circumstances been successful with a loan like this from the Post Office? I'm just pretty worried that my score will take another hit should I be rejected

Any advice would be greatly appreciated!

Thanks all,

Tom
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Comments

  • Gaz83
    Gaz83 Posts: 4,047 Forumite
    1,000 Posts Combo Breaker
    Ignore the score. The score doesn't matter. They're ficticious. The PO wouldn't even see your score of 239. Your credit history is what matters.

    Clearscore don't offer loans. They're not a lender.

    Bear in mind though that even if you're accepted, it's incredibly unlikely that someone with a poor credit history will be given the headline rate of 3.4%. You may find you're given a much, much higher rate.
    "Facism arrives as your friend. It will restore your honour, make you feel proud, protect your house, give you a job, clean up the neighbourhood, remind you of how great you once were, clear out the venal and the corrupt, remove anything you feel is unlike you... [it] doesn't walk in saying, "our programme means militias, mass imprisonments, transportations, war and persecution."
  • spadoosh
    spadoosh Posts: 8,732 Forumite
    Ninth Anniversary 1,000 Posts Name Dropper Photogenic
    You need to look at the reason why its suggesting you have a low score.

    The score itself is pretty meaningless but is used as a means of generating income for the credit reference agencies. The only person who will see your credit 'score' is you, no bank or lender will ever see that score. They will look at your credit report and use their own criteria to give you a score using their own metrics which will be different than the metrics used byt he credit reference agencies, youll either pass or not.

    Because you're consolidating, i suspect the biggest hurdle you will face will be that your credit utilisation (borrowing a large portion of your earning power). Basically you owe £xxx amount already for the loan and your asking to double it. Most lenders are ok with this if theres agreement to repay the consolidated debt but some can be more reluctant.

    Ultimately, you wont know until you apply. This is because lenders dont publish their qualifying criteria.
  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Your credit score isn't a factor in lending, as it's a just pretend number from the CRAs, purely for entertainment purposes. It's not used or seen by lenders, or an accurate reflection of credit worthiness.

    70% is a decent success rate, although the PO isn't most people's first choice of lenders.

    Have a look at your three credit files to see appears and take a view as to how lenders might see you.

    Consolidation loans are higher risk as you're doubling your debt. What is your current loan and income?
  • foxy-stoat
    foxy-stoat Posts: 6,879 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    Just apply and see how you go - credit score is irrelevant.

    Still scratching my head why you would take on a loan @ 20% but hey ho.

    Report back.
  • Whomas
    Whomas Posts: 7 Forumite
    Your credit score isn't a factor in lending, as it's a just pretend number from the CRAs, purely for entertainment purposes. It's not used or seen by lenders, or an accurate reflection of credit worthiness.

    70% is a decent success rate, although the PO isn't most people's first choice of lenders.

    Have a look at your three credit files to see appears and take a view as to how lenders might see you.

    Consolidation loans are higher risk as you're doubling your debt. What is your current loan and income?

    Hi thanks everyone for the replies

    My current loan is currently around £6,000, my annual income is roughly around £38,000, i say roughly because its determined on overtime as well which is factored into my contract (I work a 40 hour week minimum but I'm contracted to work up to 50 if possible, anything over 40 hours in a week is deemed extra to my salary and earned as over time)

    My past history as a teenager was a lot of payday loans, I payed all these off close to 7 years ago now but my "score" never really recovered

    I always pay my bills on time and I'm never late on a rent or loan repayment

    I chose the 20% loan at the time as it was one of the only ones I was offered and because it was with my bank I knew i'd get it, I guess I was just scared of the potential damage to my credit history

    Thanks all!
  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Have you checked all three files?
  • spadoosh
    spadoosh Posts: 8,732 Forumite
    Ninth Anniversary 1,000 Posts Name Dropper Photogenic
    You need to properly look through your credit file.

    If your only credit issues are from 7 years ago, for those earnings and borrowing you shouldnt have any trouble at all being accepted for a loan.

    The score is based on algorithim a CRA will use. I think they typically look at thigns that lenders like and dont. So say you have a defulat on credit file it might knock off 200 points, a late payment knocks 10 off etc. If your credit issues are 7 years old there shouldnt be much if anything of them left on your credit report so theres nothing youve said that would suggest such a low score which is why im suggesting you investigate this further. It could be something like registering for the electoral roll or having 5 credit accounts open that you aren t using etc.
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
    10,000 Posts Eighth Anniversary Name Dropper Photogenic
    Whomas wrote: »
    Hi there,

    My first post on this site so apologies if its been asked before

    I'm looking to apply for a loan from the Post Office, I currently have a loan with my bank Natwest at around 20% but the Post Office loan in comparison is 3.4% which i plan to use to pay off the Natwest loan with in full, lowering my monthly payments

    The issue is that my credit score is pretty low

    Clear score has offered this Post Office loan to me with a "70%" success rate based on a credit score of 239 out of 700 and all my other personal factors

    Anyone with similar circumstances been successful with a loan like this from the Post Office? I'm just pretty worried that my score will take another hit should I be rejected

    Any advice would be greatly appreciated!

    Thanks all,

    Tom

    ClearScore are saying that 70% of people with a similar credit history have successfully applied for a loan with Post Office. The loan is also advertised as have a representative rate of 3.4% so whilst 70% of applicants, that ClearScore know about, have been offered a loan it doesn't mean that loan offered has an interest rate of 3.4% APR.

    Lenders don't just use your credit history when deciding whether to lend to you. They will use other factors such as affordability, past dealings with them, and a host of other things that you, I and ClearScore do not know about.
  • Whomas
    Whomas Posts: 7 Forumite
    Have you checked all three files?

    All 3 files?

    Sorry I'm not sure what that means!
  • MallyGirl
    MallyGirl Posts: 7,201 Senior Ambassador
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    there are 3 credit reference agencies (CRAs). Not every financial provider reports to every CRA so you may see different activity between the 3. That is why you need to check them all as you probably don't know which one provides services to the company you are applying to

    So Experian may not get fed info from card 1. If you have a default on card 1 that wouldn't show with Experian so if you applied for a new card with a company that uses Experian for their checks then you might get offered a better deal. On the other hand if you had a history of perfect behaviour with card 1 then that wouldn't show on Experian either so you might lose out on good deals for that reason
    I’m a Senior Forum Ambassador and I support the Forum Team on the Pensions, Annuities & Retirement Planning, Loans
    & Credit Cards boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com.
    All views are my own and not the official line of MoneySavingExpert.
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