Why is my score this low? Please help!

lizferris1984

vacheron wrote: »

The problem is the suggestion that small loans and overdrafts give to lenders, especially as they can't see anything regarding savings amounts.

Consider 2 work colleagues:

• "A" owes £10,000 to other colleagues but has paid those colleagues off religiously whenever they have requested repayment for at least the last six years without fail. They have no savings, but you don't know this.
  
  
• "B" owes £500 to colleagues but this has recently reduced this to £300, however they have failed to the money back when requested a few times since borrowing it, they also ask to borrow an extra £100 for a few days every now and again and will pay them back £120 if they help them out. You would assume this is to make ends meet as they don't have any savings. They actually have £20,000 in savings... but you don't know this either.

Given the above, "A" is in far more debt while "B" has savings and their debt has reduced. But which person would you feel you'd trust more to repay all your money on time, based only on the evidence available to you?

Makes sense - however, my end goal is to get a small mortgage, and my future mortgage provider is the same building society that provides my savings accounts. So they obviously will know how much I have in savings when I apply.

I have already spoken to them regarding my credit file. They have said they don't see it being an issue by the time I will be applying (2 years plus from now), based on the deposit amount.

lizferris1984

Deleted_User wrote: »

There are many aspects to building a good credit profile.

Making repayments is one, but affordability is also key.

Of course - hence why I checked before I took the loan, that repayments would be balanced by reductions in other outgoings. I've adjusted my budget, so I'm not paying out any more per month than I was previously.

ViolaLass

lizferris1984 wrote: »

Of course - hence why I checked before I took the loan, that repayments would be balanced by reductions in other outgoings. I've adjusted my budget, so I'm not paying out any more per month than I was previously.

Affordability in the sense of 'they needed to borrow £500, which suggests they have no savings they can fall back on, this is a concern'.

[Deleted User]

Exactly.
You’re still confusing terminology.

Taking out a loan does not look advantageous to a future prospective lender, even if it was to reduce a debt elsewhere.

In fact the debt hasn’t been reduced but shifted from one source to another.

Paul_DNAP

lizferris1984 wrote: »

I can see why it would create this impression, definitely. But in my case - not being in control of my budget wasn't the reason I took the loan. I actually have very good budget control, I write down a budget every month religiously, to check what is coming in & what is being paid out. I understand that no one can else can see this, but I obviously know in myself I am not out of control, and for that reason I know a short term loan won't be a repeat occurance!

I broke an egg to make an omlette, essentially. I don't feel bad about it because it wasn't impulsive.

Exactly that - any future potential lender won't see your diligence, they will see that you have outstanding balances on however many credit cards, they will see your defaults, and they will see you going to payday lenders for the occasional £500 and they will jump to the same conclusions that I may have done.


I would still say, however, that nobody who "has good budget control" should ever need to borrow £500 commercially. And repaying such a loan properly, while it may be a good thing, will not completely outbalance the fact you took it out in the first place when they weigh up their decision to lend you enough money to buy a house, or not.

lizferris1984

ViolaLass wrote: »

Affordability in the sense of 'they needed to borrow £500, which suggests they have no savings they can fall back on, this is a concern'.

Yes but they know I have savings because the accounts are with them!

lizferris1984

Paul_DNAP wrote: »

Exactly that - any future potential lender won't see your diligence, they will see that you have outstanding balances on however many credit cards, they will see your defaults, and they will see you going to payday lenders for the occasional £500 and they will jump to the same conclusions that I may have done.


I would still say, however, that nobody who "has good budget control" should ever need to borrow £500 commercially. And repaying such a loan properly, while it may be a good thing, will not completely outbalance the fact you took it out in the first place when they weigh up their decision to lend you enough money to buy a house, or not.

I don't have outstanding balances on any credit cards. I have one card and the balance is £0.

The loan wasn't from a payday lender, as you've incorrectly assumed. It was from a regular personal loans company. I'm sorry but I haven't read anything, anywhere about a non-payday personal loan leading to mortgage refusal. If you have, please enlighten me.

[Deleted User]

The point, that you’re either ignoring or not grasping, is that for someone that has savings and a deposit for a house and a good sense or budget/money management, somethings not adding up (excuse the pun).

You wouldn’t need a loan and a mortgage advisor or broke will ask why you took the loan when you had disposable cash to pay with instead.

Verityspinelli

lizferris1984 wrote: »

Yes but they know I have savings because the accounts are with them!

You’re assuming the bank that has your savings is going to offer you a mortgage, what if they don’t ? Your savings won’t be seen by any other lenders.

[Deleted User]

^^this

And regardless of having savings, that doesn’t mean the bank is obliged to give you a mortgage.