Banks and person centred service

I have credit cards but want a consolidated loan to pay off the cards and have an easier life repaying the loans. But my bank won't lend.In fact, in 12 years of banking with this bank I have not received a loan approval. I have therefore been forced to use the high interest loan organisations and have paid off the loans. Yet the bank which wrote me appreciating my management of my debts and advising that I would benefit from consolidating my credit card debts failed to approve the loan when I applied. My credit score was 844 at the time. 
Now I have taken up another credit card pushing my credit down to 644 whereas if they had approved the loan, I would have paid significantly less than about £400 a month which I pay towards a total of 10300pounds credit card debt.
My view is that this bank is pushing me far towards debt than helping me out of it. What can I do? 
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Comments

  • Ebe_Scrooge
    Ebe_Scrooge Posts: 7,320 Forumite
    Name Dropper First Anniversary Combo Breaker First Post
    edited 28 October 2021 at 5:43PM
    What can you do?  First off, ignore your score - it's not a factor in lending decisions.  Secondly, forget about consolidations loans - they are almost never a wise choice.  The reason you're not being approved for main-stream loans is likely to do with (a) your current indebtedness, and/or (b) a less than favourable credit history, and/or (c) your current and projected debt-to-income ratio.  Taking out further credit to try and repay your current debt just ain't going to work - head over to the debt-free wannabe board for advice on how to reduce your outgoings and repay the debt you currently have.
    I have to ask - if you were able to pay off high-interest loans, why were you unable to pay off your credit cards?  Credit cards have high APRs, but they are usually dwarfed by those imposed by the legalised loan-sharks that are out there.
    I think your last point is rather misguided.  Far from the bank pushing you further into debt, they are refusing you the facility to take on more debt - quite the opposite, in fact.
  • Lenders see consolidation loans in terms of affordability on the basis you might spend the loan at the local greyhound track so have to assess you for existing debt + new debt, not just the loan. Hence why mainstream lenders won't offer it so all you get are expensive ones who are willing to gamble on making money from you. Further, consolidation loans rarely work as they don't address the root cause of why you are in debt and why you ran up the debt - having more money free every month is a temptation for many to just run up more debt or keep spending / keep the bad credit habits etc. If you pay off your cards and suddenly you have loads of credit, will you cut the cards up or keep spending? If you are saving money from consolidation, why not overpay the loan? 
  • kaMelo
    kaMelo Posts: 2,373 Forumite
    First Anniversary First Post Name Dropper
    What can you do? The short version is earn more, spend less and stop borrowing money.

    The long version It's important to understand no one forced you to do anything, your financial affairs are down to your choices. Trying to blame others for "forcing you to take out high interest loans" might make you feel better but it's not true. Consolidation loans might make your life easier but often fail as people resort to spending even more. Until you address the underlying problem of spending more than you earn then nothing is going to work.

    Ultimately there is no way of spending more than you earn without it becoming a problem. As above, head over to the DFW board for help on managing your budget.


  • I have credit cards but want a consolidated loan to pay off the cards and have an easier life repaying the loans. But my bank won't lend.In fact, in 12 years of banking with this bank I have not received a loan approval. I have therefore been forced to use the high interest loan organisations and have paid off the loans. Yet the bank which wrote me appreciating my management of my debts and advising that I would benefit from consolidating my credit card debts failed to approve the loan when I applied. My credit score was 844 at the time. 
    Now I have taken up another credit card pushing my credit down to 644 whereas if they had approved the loan, I would have paid significantly less than about £400 a month which I pay towards a total of 10300pounds credit card debt.
    My view is that this bank is pushing me far towards debt than helping me out of it. What can I do? 
    My view is this bank sees you as a high risk and doesn't want to lend more money to you that could simply be used to rack up more debt.  I'd argue they're rather sensible in this regard.  Anyone who needs to consolidate is immediately high risk.  Why was the original debt not paid off?  Why are you needing to consolidate at a lower rate?  Why was your initial rate "high"?  Do you think borrowing more money is going to make you a lower risk,? If so, why?  You have more lines of credit primed to be used once your consolidation loan pays them off, and if it doesn't you're just in even more debt.

    If someone you knew asked you to lend them money to pay off a debt they had with another acquaintance would you, being honest, actually lend them the money?  Or would you say "hey, why should I be on the hook for this instead of whoever lent the money in the first place?"  If the answer isn't the latter that might be something you need to look at, it's probably why you're in the mess you're in now.
  • Sncjw
    Sncjw Posts: 3,508 Forumite
    First Anniversary Name Dropper First Post
    You do realise you are doubling your debt when you consolidation loan. They will take in account affordability on the current debt plus the new loan as theres garuntee you will use that money to pay curre t debts. 

    Most likely the overall debt is higher than your Ibcone. You should get on debt free wannabe page to work out how to pay off your debts rather than get a new loan. 
    Mortgage free wannabe 

    Actual mortgage stating amount £75,150

    Overpayment start date 1/3/23.

    Starting balance £66,565.45

    Current balance £63,787.16

  • sourcrates
    sourcrates Posts: 28,878 Ambassador
    First Anniversary Name Dropper First Post Photogenic
    I have credit cards but want a consolidated loan to pay off the cards and have an easier life repaying the loans. But my bank won't lend.In fact, in 12 years of banking with this bank I have not received a loan approval. I have therefore been forced to use the high interest loan organisations and have paid off the loans. Yet the bank which wrote me appreciating my management of my debts and advising that I would benefit from consolidating my credit card debts failed to approve the loan when I applied. My credit score was 844 at the time. 
    Now I have taken up another credit card pushing my credit down to 644 whereas if they had approved the loan, I would have paid significantly less than about £400 a month which I pay towards a total of 10300pounds credit card debt.
    My view is that this bank is pushing me far towards debt than helping me out of it. What can I do? 
    Can you remember what you spent the 10k on ? 

    Probably not, its easy to start loading up the creditcard, life can be tough at times, obtaining loans, or attempting to obtain a loan, to pay off credit card debts, is a very old and familiar story.

    For lots of people, its the very first thing they think of, borrow more money, to make my payments lower, sounds fine doesn't it, until you realise that those who do this, never only do it once, many do it numerous times, as they fail to address their spending habits first, and they keep those credit card accounts open.......just in case yea.

    They also find they are perpetually in debt, as a large bill looms, which they neglected to budget for, Bang, straight back on the credit card, so its rinse and repeat, it can be a very vicious cycle to break free from.

    Banks used to love consolidation loans, mega money earners for them, FCA regulation, and COVID-19 in particular, has forced a major re-think on Banks lending policies, they are much more risk aware these days.

    Living your life using credit to fund it, is never a good life choice, you may benefit from some debt management advice, I don`t know your particular circumstances, but what I can tell you is further borrowing is not the way forward here.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Name Dropper Photogenic First Anniversary First Post

    My view is that this bank is pushing me far towards debt than helping me out of it. What can I do? 
    Learn to budget. Control your spending and minimise your outgoings. Only you have control over your money. 
  • Ergates
    Ergates Posts: 2,108 Forumite
    First Anniversary First Post Name Dropper
    I have credit cards but want a consolidated loan to pay off the cards and have an easier life repaying the loans. But my bank won't lend.In fact, in 12 years of banking with this bank I have not received a loan approval. I have therefore been forced to use the high interest loan organisations and have paid off the loans. Yet the bank which wrote me appreciating my management of my debts and advising that I would benefit from consolidating my credit card debts failed to approve the loan when I applied. My credit score was 844 at the time. 
    Now I have taken up another credit card pushing my credit down to 644 whereas if they had approved the loan, I would have paid significantly less than about £400 a month which I pay towards a total of 10300pounds credit card debt.
    My view is that this bank is pushing me far towards debt than helping me out of it. What can I do? 
    As others have said - head over to the debt free wannabe board.  The people there will over real practical advice and support on helping you sort out your debts, though there are no magic answers, it'll be a hard journey.
  • True. But what are loans for? Are they not products and brigdes for creating finance?
    You seem to miss the point that I feel discriminated against by the bank I have banked with for that long.
    There is hardly any enterprising individual who doesn't need a loan but this type of discrimination empowers others better.
    My outgoing is the problem here, the high cost of interest. Why pay 67% when I could have less than 20% from a bank I have been with for over a decade? 
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
    Name Dropper First Post Photogenic First Anniversary
    True. But what are loans for? Are they not products and brigdes for creating finance?
    You seem to miss the point that I feel discriminated against by the bank I have banked with for that long.
    There is hardly any enterprising individual who doesn't need a loan but this type of discrimination empowers others better.
    My outgoing is the problem here, the high cost of interest. Why pay 67% when I could have less than 20% from a bank I have been with for over a decade? 
    You are not a safe bet. You are a high risk to lenders, that’s not discrimination, that’s statistics. You are in a debt spiral. Further borrowing is not the answer. The Debt Free Wannabe board is where you should be posting, not the Loans board. 
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