What type of things to lenders look for on applications?

MrsYa8

Looking for a personal loan for house renovation. We are doing most of the work using our spare money but need to replace the kitchen so looking to take out a personal loan to cover this (we have thought long and hard and feel this is the best solution for us)

We bought the house in December 2021 - FTB and have been declined 3 loans so far. I really don't want to apply again until I know every thing is in place. So happy to wait. 

I emailed Check my file to ask them for advise on why they feel that I'm being declined loans and their response was  that I have a good credit score and no negative influences and how different lenders use different criteria. 

I do have existing debt £5k on credit cards that I would like to consolidate into the loan. Now I know the lender will include this as a debt even though I want to consolidate. 

Do they work out a Income to debt ratio? If so how is do they work this out? And what percentage are they looking for? 

My mortgage payments is also showing incorrect on my credit file and is showing my first payment which was significantly more than my normal monthly payments. I need to get this amended as this will effect my affordability. Also this is joint mortgage so do they divide the payment by 2 for my share of the monthly payment. 

My question is what are the types of criteria lenders are looking for? 

I have an income of £44,000 per year. With £5k on credit cards. No HP, no phone contract. 

Can some one advise. 

[Deleted User]

They look at income, debts, credit history, ER, financial associates, address stability, affordability, etc. The one thing they never look at is your credit score.

Your likely hurdles are your recent move, electoral roll and your existing debts.  You also now have three searches on your file so are looking desperate.  Give it a few months before applying again.

Make sure you check all three of your files (preferably directly, rather than via Checkmyfile) to see that everything is in order.

Ebe_Scrooge

As always, ZX81 has given a succinct and accurate reply.

In terms of what a lender looks for, all lenders will have very different criteria (which is one reason why the score dished out by the agencies cannot possibly have any relevance).  Affordability does play a big part in most lending decisions.  As a very very broad rule of thumb, if you're looking at unsecured debts of more than about 50% of income, you might struggle.  I will emphasise this is a sweeping generalisation, and all lenders have different criteria.  But if you're looking for ballpark figures, this is a reasonable rule of thumb to start from.

Of course, all of the other factors mentioned by the previous poster play a big part as well, and in combination with each other may very well conspire to scupper your chances of a loan at a reasonable rate.

Would it be feasible to do the work piecemeal, so that you can pay for each stage from savings/income, or else with smaller loans?  Failing that, you may just have to live with the kitchen you've got and save up for a new one (which is always the MSE option, but I know it's not always the preferred option).