car loan rejection: next step

m567

Hello

Zopa has rejected my car loan (10k over 24 months). They didn't say why exactly.
My credit score estimate was 980 or so according to the email i get from the website associated to MSE.

I strongly suspect the rejection was due to no records whatsoever in the credit files. I never borrowed.

Things have evolved and I now need only 5k.

I have been banking with 1 of the 4 for 20 years and have sufficient disposable income. I will try a branch face to face.

What other steps can I take?

jester212

Ignore your 980 score. It is meaningless and lenders have no access to your score, only your credit repayment history, which admittedly you indicated is sparse.

Try some eligibility checkers prior to any further applications. You may be successful with your bank, at very least it is worth a chat.

hunte78

Firstly, forget about the score. Credit providers look at your credit history, not the fictitious score provided from the credit reference agencies. As you have discovered you can have a high credit score but be rejected for finance. I would imagine, as you suspect, that it is your thin credit file that is the problem here, credit providers have no evidence of you managing credit responsibly and paying off your debts.

Going forward, have you looked at finance through the car salesroom? Sometimes it is easier to get this as the lending is secured against the car- you don't pay, they take it away.

To build your file you should have a credit card that you use for your food shop/fuel and pay off IN FULL every month. Monthly mobile contracts, mortgage? These also get reported.

You should check all 3 CRAs, you can do this free - sign up for the MSE credit club, Clearscore and Noddle.

YorkshireBoy

If you've been with the same bank for 20 years why would they not be your first port of call?

AnotherJoe

Do what hunte78 said, get an credit card, pay it off each month, lots of benefits such as enhanced protection, cash back, buildinga cerdit score for times when you need a loan, which brings me to second point, you have inadequate savings and should focus on building that up

m567

I do have savings. They are locked in fixed accounts.
Actually my target is to build my credit file and thought I'd use this load for that.
Credit card sounds like the way to go indeed. Thanks

System

m567 wrote: »

Actually my target is to build my credit file and thought I'd use this load for that.
Credit card sounds like the way to go indeed. Thanks

Yeah, never pay money in interest to rebuild your credit file. Get a credit card, pay off in full every month.

SlovakianGuy

Tarambor wrote: »

Yeah, never pay money in interest to rebuild your credit file. Get a credit card, pay off in full every month.

Or get some with 0% offer for 2 years if eligible. Someone in the thread about stoozing has said that paying only minimum payments each month (on during 0% period) resulted in higher credit limit on every next card.

It's interesting. I still have 0% introductory period on my Nationwide CC. Just out of curiosity, I started building up a balance of a few hundred pounds, making only a minimum payment or slightly above minimum (because minimum shows as "M" on my credit report) and just 2 months later I received a letter offering me credit limit increase which I accepted. Credit limit increase is generally a good thing because it shows lenders that your current credit provider trust you enough to offer you more credit.

Mr.Generous

SlovakianGuy wrote: »

Or get some with 0% offer for 2 years if eligible. Someone in the thread about stoozing has said that paying only minimum payments each month (on during 0% period) resulted in higher credit limit on every next card.

It's interesting. I still have 0% introductory period on my Nationwide CC. Just out of curiosity, I started building up a balance of a few hundred pounds, making only a minimum payment or slightly above minimum (because minimum shows as "M" on my credit report) and just 2 months later I received a letter offering me credit limit increase which I accepted. Credit limit increase is generally a good thing because it shows lenders that your current credit provider trust you enough to offer you more credit.

Having a higher credit limit and not using it shows lenders a few other things too. It shows you have a responsible attitude towards borrowing as you have funds available that you don't use, and that you manage your money well. Good plan.

SlovakianGuy

Mr.Generous wrote: »

Having a higher credit limit and not using it shows lenders a few other things too. It shows you have a responsible attitude towards borrowing as you have funds available that you don't use, and that you manage your money well. Good plan.

Thanks. I just wonder if carrying forward a credit card balance is a good thing in the eyes of lenders. It seems to be a good thing in the eyes of credit reference agencies, because since I started building up that balance and only pay nearly minimum payments, my credit score on Equifax has skyrocketed. Experian jumped up too. I know that credit score doesn't really matter, I'm just saying it looks like credit ref. agencies consider carrying forward my credit card debt a positive thing.

Btw, I also opened a current account with overdraft which increased my "total available credit" even more.

I've heard however, that having too much available credit while on relatively low income, may look somewhat "intimidating" to some lenders.