Loans without 3 year UK address history?

ReadingTim

Hardly surprising is it? Would you lend money to someone you've only just met? No - and neither do the banks.

- this is why you need a credit history - why's that concept so hard to grasp?!?

WBlauvac

Well, that's probably down to the fact that in other countries (i.e. France) there is no such requirement. Having to wait at least 3 years before borrowing anything is a very long time IMO.

This is not a matter of not understanding that you need a good credit score, more a critic of a very rigid system where a financially suitable candidate can't access any loan product at all because banks won't look at other means of assessing his request.

Being a French citizen who moved to the UK about a year ago, I find this system VERY restrictive, especially when you might have some needs following your moving in.

In France most banks, when they can't rely on your Credit Score (because of short history), will instead ask you for a bunch of documents and assess your request based on these (i.e. proof of employment, 3 months payslips, 3 months bank statements to check if you have any other regular expenses...). I find it crazy to be locked down not being able to borrow any amount at all when you are in a position of perfectly being able to repay such loan.

I currently have to check with my previous french bank to get a loan to buy a computer replacement in the UK because of this, which I find ridiculous considering the loan would require me to pay back about 50£ a month while I am able to "save" at least 500£ every single month after all expenses and taxes - I earn way more than enough to pay it back, have a full-time job but just don't have the treasury right now, I found this great discount on a laptop but can't buy it because of this.... just ridiculous considering I could provide all the documents needed to back up my request (which is why my French bank will probably accept my request despite the fact that I live in the UK...).

MallyGirl

That is because they don't do credit checks in the same way in France - there is no equivalent of a credit history that is shared across institutions. You can be declined for credit by one bank and simply go to another and borrow from them instead as they don't share data.

poppasmurf_bewdley

WBlauvac wrote: »

Well, that's probably down to the fact that in other countries (i.e. France) there is no such requirement. Having to wait at least 3 years before borrowing anything is a very long time IMO.

This is not a matter of not understanding that you need a good credit score, more a critic of a very rigid system where a financially suitable candidate can't access any loan product at all because banks won't look at other means of assessing his request.

Being a French citizen who moved to the UK about a year ago, I find this system VERY restrictive, especially when you might have some needs following your moving in.

In France most banks, when they can't rely on your Credit Score (because of short history), will instead ask you for a bunch of documents and assess your request based on these (i.e. proof of employment, 3 months payslips, 3 months bank statements to check if you have any other regular expenses...). I find it crazy to be locked down not being able to borrow any amount at all when you are in a position of perfectly being able to repay such loan.

I currently have to check with my previous french bank to get a loan to buy a computer replacement in the UK because of this, which I find ridiculous considering the loan would require me to pay back about 50£ a month while I am able to "save" at least 500£ every single month after all expenses and taxes - I earn way more than enough to pay it back, have a full-time job but just don't have the treasury right now, I found this great discount on a laptop but can't buy it because of this.... just ridiculous considering I could provide all the documents needed to back up my request (which is why my French bank will probably accept my request despite the fact that I live in the UK...).

As it was in January of this year when you first raised this matter, I presume that in the intervening 11 months you have saved enough from your £500 a month savings to buy the car/computer that you required, so don't now need a loan.

WBlauvac

And how is that an issue? If different banks have different level of risk-aversion? So long as they do their Due Diligence on your financial situation?

The UK system is very very backward looking and thinks pretty much only in terms of your past behaviour while not thinking at all in terms of "given this individual CURRENT and future situation, will he be able to payback his loan?" - once again, having someone with a year of banking history who never had a single overdraft, earns more than enough to repay a loan seeing his request denied on the account that there is not exactly 3 years of credit history is extremely rigid and limiting (and not in a good way IMO).

I get that UK banks want to understand your financial behaviour but in the end aren't the most critical points "is this person financially safe (i.e. Full Time job)? how much does this person earn? Is it enough to pay back the loan?".
Worst case scenario they just freeze your account until your salary drops on your account and they just take the loan amount from you (since you have enough to pay it anyway since they checked you salary first) - that's what french banks do in t he rare cases the person is trying to mess with them by not paying back even though they can.

It really just feels like UK retail banks are too lazy to conduct any kind of background check / Due Diligence on their customers and just rely on credit rating agencies...

Anyway, we won't change the system, just wanted to add my grain of salt and explain why IMO the UK system and the whole 3-years of history might seem weird to a lot of people (especially UK-based foreigners) - "why's that concept so hard to grasp?!?" well, it isn't per se (the fact that you need to be financially safe for a bank), but the way the checks are conducted can be (especially for a financially healthy person being rejected where it wouldn't have been in another system).

WBlauvac

"As it was in January of this year when you first raised this matter, I presume that in the intervening 11 months you have saved enough from your £500 a month savings to buy the car/computer that you required, so don't now need a loan."

1) I locked down most of my savings as it is financially more interesting to me and 2) I used part of it to pay for my family's holidays (which together explain the treasury need)

This is not a matter of "why didn't this person keep her savings on her current account" but "is this person able to afford the loan?" and the answer is yes, clearly. How this person spends her money is none of your business or the banks' business so long as the loan is repaid.

Leverage is often a good way to optimise your finance even when you are financially healthy you know? And can also be more practical than saving money on your current account which means losing on savings...

Once again, I find it quite counter-productive.

adindas

gurtsn wrote: »

Need a bigger, more spacious transport for my street food business. Dont want to use all savings and not to have backup.
But seems like saving for it would be the only wise choice with this rates.

gurtsn wrote: »

Hi there
I am in a same situation, 10 months residency in the UK.
Did you manage to access a loan yet?
I found few companies that will grant a loan for bad score and without 3 years address history.
But with a tiny 49%APR.
I am with NATWEST, going and talking face to face with them would help?
Cheers.

Interesting is someone is saying 49% is tiny Especially for a car loan ??

It is also interesting that a person just come here to post these two posts.

In many cases, car finance, might be much better option for the OP than eye watering 49% interest as they have cars as a security.

fwor

WBlauvac wrote: »

The UK system is very very backward looking

I think you'll find that the system currently used in the UK suits the competitive environment here.

Thirty or forty years ago in the UK, your Bank Manager would have had discretion about who gets a loan and who doesn't.

That doesn't happen now, for a number of reasons. Firstly there was no consistency - if you went to another branch of the same bank, you might get a completely different decision.

And secondly it was prone to nepotism and fraud.

However, probably the most important reason is that lending is both a competitive and a risky business, and banks have found that they can speed up the process and reduce the number of skilled staff involved, and they can also reduce the number of bad debts simply by computerising the decision making process and sharing data.

I suspect that in 10 years time you will see the same system in use in France.

Slappermum

WBlauvac wrote: »

The UK system is very very backward looking and thinks pretty much only in terms of your past behaviour while not thinking at all in terms of "given this individual CURRENT and future situation, will he be able to payback his loan?" - once again, having someone with a year of banking history who never had a single overdraft, earns more than enough to repay a loan seeing his request denied on the account that there is not exactly 3 years of credit history is extremely rigid and limiting (and not in a good way IMO).

I get that UK banks want to understand your financial behaviour but in the end aren't the most critical points "is this person financially safe (i.e. Full Time job)? how much does this person earn? Is it enough to pay back the loan?".

The system IS flexible, though. Yes, you won't be able to do it from the comfort of your sofa by clicking a few boxes like people with 3+ years of address history can, but you can always go to a branch and get a human to override some of the restrictions. That's what I did in 2017, with barely 7 months of address history. Made an appointment in my (high street) bank and got offered a credit card with a 4k limit. I think my salary was £35k-ish at the time. Fast forward a year and a half, so still well under the 3 year limit, and I was approved for a mortgage.

WBlauvac

Now that's good to know! The people talked to so far (on the phone) were pretty much telling that it would be tough so I didn't even bother - I'll look for a branch appointment then.

Thanks for sharing you story (which initially look pretty much like my situation - i.e. only a year or so of history and credit needs).