Bank loan eligibility checking query

gracielou10

Hello,
I was wondering if anyone knows more about this. I applied for a personal loan today for £9k and I used various soft search eligibility checkers to maximise my chances. I went for a loan with Santander, which has a low rate of 2.8%. I am accepted for the loan within 5 mins but for a rate of 14.9%, which I was a bit shocked by because I checked my credit score and have good records across the main credit reference agencies. I called Santander and there was no mistake and of course they couldn't advise as to why the rate was five times higher than the advertised rate (which I understand not everyone gets).

About half an hour later I tried a 3.3% loan with HSBC (whom I have a current account with) and entered the exact same details as for the first application. I was accepted at the rate of 3.3%. I have spoken to HSBC and they apparently check the same thing that other lenders check so for me it's very mysterious why within a short space of time, the same application details and supposedly the same checks showed such different results.

Has anyone had any experience of this? It just seems like a pot luck kind of black box.

Thanks!

Willing2Learn

Hi gracielou10 and welcome to the forum 

Every lender has their own particular lending criteria and policies.  You were just not from Santanders preferred customer profile, so you got a higher rate.  You are probably more closely matched with HSBC lending criteria and therefore got a good low APR from them.

I recommend you withdraw yourself from the Santander agreement and borrow the funds from HSBC instead.

Nebulous2

I’ve posted my view on this before. 
Lenders have to give 51% of successful applicants the headline rate. If you look up a loan table and go for the best rate you’re competing with a lot of people who are prime borrowers and have self-selected to apply for the best rates. In other words the competition is intense and you may not hit the 51%. 

If if you move down the table 4 or 5 places to 3.3% or so the competition is much less and it is easier to hit the 51% for very little difference in the overall interest. 

It’s only a theory, but we’ve had a few people on here who have not got the headline rate at 2.7 or 2.8% who we recommended to try a bit further down the table and they have came back to tell us they have been successful.

gracielou10

Willing2Learn said:

Hi gracielou10 and welcome to the forum 

Every lender has their own particular lending criteria and policies.  You were just not from Santanders preferred customer profile, so you got a higher rate.  You are probably more closely matched with HSBC lending criteria and therefore got a good low APR from them.

I recommend you withdraw yourself from the Santander agreement and borrow the funds from HSBC instead.

Thanks for the welcome and the advice - that's what I did in the end. It just bothered me because I'm consciously trying to research about building a credit profile (my husband is here on a spouse visa) and we're thinking of getting a mortgage later this year.

gracielou10

Nebulous2 said:

I’ve posted my view on this before. 
Lenders have to give 51% of successful applicants the headline rate. If you look up a loan table and go for the best rate you’re competing with a lot of people who are prime borrowers and have self-selected to apply for the best rates. In other words the competition is intense and you may not hit the 51%. 

If if you move down the table 4 or 5 places to 3.3% or so the competition is much less and it is easier to hit the 51% for very little difference in the overall interest. 

It’s only a theory, but we’ve had a few people on here who have not got the headline rate at 2.7 or 2.8% who we recommended to try a bit further down the table and they have came back to tell us they have been successful.

Nebulous2 that's a very interesting theory. Was just puzzled as I have a good credit score and history on all the sites and I couldn't see anything wrong. Your theory makes a lot of sense!

[Deleted User]

gracielou10 said:

Nebulous2 said:

I’ve posted my view on this before. 
Lenders have to give 51% of successful applicants the headline rate. If you look up a loan table and go for the best rate you’re competing with a lot of people who are prime borrowers and have self-selected to apply for the best rates. In other words the competition is intense and you may not hit the 51%. 

If if you move down the table 4 or 5 places to 3.3% or so the competition is much less and it is easier to hit the 51% for very little difference in the overall interest. 

It’s only a theory, but we’ve had a few people on here who have not got the headline rate at 2.7 or 2.8% who we recommended to try a bit further down the table and they have came back to tell us they have been successful.

Nebulous2 that's a very interesting theory. Was just puzzled as I have a good credit score and history on all the sites and I couldn't see anything wrong. Your theory makes a lot of sense!

All those sites you are using to view your credit score have something in common, none of them lend money so how they score you as a borrower is irrelevant. No lender uses those credit scores when deciding to give you a loan and at what rate. Lenders use your credit HISTORY, affordability, past dealings with you and some other bits and pieces to generate their own risk profile for you. It's not one size fits all.