Credit Score Causing Problems

Gemini84

Hi folks,

So I need some help with my credit score via Experian its classed as 'Fair' and as such I cannot get a loan anywhere - no matter how small and its insane - I'm pitching for £5k.
I have more than I want to borrow spread across various bank accounts (all with Halifax) but I'd rather have that money work for me and use a small loan to cover my initial purchase - and I can easily afford the repayments.

The problem is I cannot find why my score is so low, and no-one can seem to give me an answer as to why either.
I've tried appealing to TransUnion who dismissed the case.
I have 1 mortgage of £88k - of which I have never missed a payment, I have a credit card which I never used, read that that's why my score is low, and now am using it regularly - paying it off in full each month.
I've been to the bank who say they don't understand why its so low but can't do anything to help.
I have received my report from Experian and can't see anything a-miss.
I'm well paid for this area (£25,500pa), other than my mortgage I don't owe anyone a penny and yet.....

I don't know where to turn and I don't understand - I know people who earn less get everything on credit and roll about in all but brand new cars (on finance) and I can't seem to raise £5k?

jpsartre

Your score doesn't matter but check what it's in your credit history. Sounds like it might be an issue of a thin credit file. Are you on the electoral register?

[Deleted User]

Your score isn't important and isn't stopping you getting credit.  The problem is that you're not meeting lenders' criteria.

Check you three credit files, not just Experian. See what appears on each. Check for financial associates, ER registration, as well as any missed payments, overlimits etc.

Lending is tight at the moment, and even wanting 20% of you income in debt may be too much for some lenders. If you have the savings, use that rebuild your savings on the money you save on the loan. There's no point in having your money work for you if it's being poorly paid.

Ebe_Scrooge

As above, your score is meaningless (despite what a bank clerk might have told you).  Regular use of a credit card and always paying every month in full will start to build up a favourable credit history, which is what counts - but that takes time.

I'd be mightily surprised if your savings are earning anything approaching the interest you'd be paying on a loan.  Buy the item from your savings, then simply pay back into your savings each month what you would otherwise be paying in loan repayments - you'll end up with more in your savings than what you started out with, since you'll effectively be paying yourself the interest you would otherwise have paid to a lender.

Gemini84

jpsartre said:

Your score doesn't matter but check what it's in your credit history. Sounds like it might be an issue of a thin credit file. Are you on the electoral register?

Hi yes I've been on it since I was old enough to vote.

I've got Experian and Credit Karma - any others I should consider?

Thanks

DrEskimo

Deleted_User said:

If you have the savings, use that rebuild your savings on the money you save on the loan. There's no point in having your money work for you if it's being poorly paid.

This ^

Makes no sense borrowing at around 5%+ APR on a £5k loan whilst your money is earning less than 1% in a savings account. 

If it's the case that you would be spending your emergency fund, then the alternative is to wait and keep saving instead.

What is the loan for, and is it urgent?

Gemini84

The loan is for a bike, not urgent but something I've been wanting for a while.

My saving's aren't really savings - they are going on my new mortgage when the time comes (hoping in the next 12-18 months) which is why I'm reluctant to spend it just yet. 

I do have another option that's to borrow the money from a family member who is happy for me to repay at 0% which at this time looks like the favourable option.

My overarching concern is how why? - and how this is going to effect me further down the line with the new mortgage and other possible investments.

Gemini84

*EDIT*

Also the borrow from a family member also doesn't fix the fundamental issue.

DrEskimo

Best guess is the infrequent use of credit. Using a credit card for your normal day to day spending and then clearing each month will likely help a fair bit.

I would strongly advise against borrowing from your family. Money has a habit of ruining relationships.

Another option is going half way. Save for a couple of years for half the amount, then apply for a 0% purchase card and use that to finance the second half. Just ensure its cleared before the interest free period is up and don't use it for anything else.

If it's just for something you want, then continue saving. The real question you need to ask yourself is whether you can afford to buy a £5k bike whilst also saving for a house deposit, whilst also ensuring you have an emergency fund, whilst also ensuring you have plenty of savings for the house move.

Only you know the answer.

Sncjw

You do realise any debt you have will be taken off the amount the mortgage lender will. Lend you. So do you really need the bike? 

macman

The money you have spread across various Halifax savings accounts isn't 'working for you'. It's currently being consumed by inflation at a far higher rate than the paltry amount you are earning in interest.