Loan application rejected - why?

redbobble

Long time reader, first time poster!

We have recently bought a house (completed on 20th March 2020) and are completely renovating it. It is currently a building site and non-habitable.

We estimate the cost to be £40k, we are comfortable with our estimates as we have both been in the trade and family are mostly doing the work. It's also not our first refurbishment.

We put £20k of our own money in and applied to finance the rest. Our household income is just over £100k. Never had any financial problems, have used credit (cars, phones etc). but have always paid on time.

Outgoings are the mortgage (£1300 a month) one car on PCP (£250 a month) and the usual utilities. There is a 0% credit card with £5k on it, that's just been used for recent purchases on the house. One of us has a good credit rating, the other excellent (according to Natwest's credit scorer). We still have £6k in savings from the £20k.

The plan is (was?) that we got the loan for the maximum term, then repaid it when we remortgage by releasing equity, in 2023. The loan is circa £200 a month so more than manageable. 

We knew that getting a loan after moving can be tricky with address changes, so we applied to go on the electoral roll straight away. We received a letter from the council stating the address will be formally updated on 01/05/20. We applied for the joint loan on 05/05/20 and the single application on 07/05/20.

We have been rejected twice now, once for a joint application for a loan over 8 years and once for a single application over 10 years (this was with our personal bank we have used for 4 years). We have queried with the banks and they just state "eligibility" as the factor. We specifically raised whether the address or recent mortgage application was a factor but they couldn't advise us any details. They also stated that we couldn't appeal the decision - which we found strange!

We are slightly stuck as to what is the next best step. We don't want to keep applying for loans or do any further damage to our good credit scores. Our thoughts are:

• Electoral register has not been updated with the credit agencies yet.
• The recent mortgage application may be having a negative impact on the application.
• With Covid-19 banks are being very wary.
• All of the above.

Any advise on next steps? We think it would be good to pull both of our credit reports so we can see whether any of the information is incorrect.There are so many out there, is there one in particular we should look at using?

Is there a set amount of time we should wait before applying again?

Any help and advise is appreciated!

[Deleted User]

Don't worry about your credit score - either in terms of your credit worthiness or any damage to them.  They're not a real thing and play no role in lending.

You're right to start by looking at your three credit files (each).  Review what's on there.  There may be an obvious issue, or it may be affordability (mortgage, plus car loan plus credit card debt makes you a higher than average risk) or simple lending criteria.

redbobble

thanks for the quick response, where is the most reputable place to get the 3 credit files? 
Reference affordability, we have passed that initial "soft check" which runs through the financials, so assume this can be discounted?

[Deleted User]

You check your credit files with CRAs.  Equifax (Clearscore), Experian (MSE Credit Club), Transunion (Karma).

Yes, a soft check would normally score you against primary internal criteria and a brief peek at your credit files.

ict_guy

Check you credit file and, in particular, check you don’t have credit agreements registered at an old address. Your credit card, for instance, is it registered at your new address?

redbobble

thanks for the response, when i pull my credit file, will it be clear if the addresses are wrong, I assume they are all listed out?
Is there a danger i could do more damage to my credit score pulling all 3 files? 

[Deleted User]

You don't have a credit score, so it's fine to review your files as often as you want.

Just check the data on each.

DCFC79

redbobble said:

thanks for the response, when i pull my credit file, will it be clear if the addresses are wrong, I assume they are all listed out?
Is there a danger i could do more damage to my credit score pulling all 3 files? 

Chdck your 3 files and post back here what your history says.

redbobble

i have pulled the reports, what information should i paste here?
What jumps out straight away is that i am not on the electoral register at that address, despite council confirming in place on 01/05/20!

mcpitman

Council confirming in place in 1st May, means it will pull to your report next month (possibly the month after, depends how often your council updates the CRA's)

IrishSean

mcpitman said:

Council confirming in place in 1st May, means it will pull to your report next month (possibly the month after, depends how often your council updates the CRA's)

Correct

Plus its a combination of factors, as you said:

*Affordability matters less now you have 2 rejections on your report; weirdly they don't list as rejections to lenders they only see live credit accounts, but if you keep applying it will prob keep hurting ur chances
*Check with loan, mortgage and CC providers themselves that they hold your new address then update inaccuracies on ur 3 credit files
*I fear you might have to wait a number of months before applying again, not just for your credit reports to update but to make lenders feel less 'spooked'. Maybe up to 6 months (other views welcome)
*Credit score is irrelevant here as it's only a barometer of credit health. I'm a lot less bearish about it's use (ppl shud keep an eye as a dip in score could mean you're the victim of identity theft, if nothing else). As stated, your file details being accurate is key.
*No harm in continuing to do soft searches, like through MSE credit club and Clearscore as lenders don't see them. They're not exact (growing number of ppl on forum saying they've a high %% likelihood and getting rejected). 
*Lenders tell us f all about what exact criteria they use, even what credit report they review / use. All you can do is post up redacted details and let those with most credit file experience here guide you on achieving fixes. I had 11 minor inaccuracies / typos on my equifax file, 6 updated: I found it a pain in the hole TBH but necessary to do to avoid rejections which, as we know, are more of a pain.

GL mate👍