Good credit score but still being turned down

larryclack

Hi folks, 

Just trying to secure a loan to pay off an overdraft and a higher % small loan, but getting turned down. Was looking to take £12,000 over 7 years, the slightly strange thing is it was coming up as having a 95% acceptance using this sites search but still not going through. I'm guessing not but is there anyway you can find out what the issue is? 

Credit score is very good 626/710 on Transunion, only using a quarter of potential debt, always made payments etc. 
 

[Deleted User]

Your score has no bearing on your likelihood of being accepted.

Being in your OD tells lenders you have no disposable income, so the £12k is likely to be seen as too high risk. Check your three files in detail to see what appears - your debt and income will be the most important factors, in the absence of significant bad history.

larryclack

Sorry the checks I'm doing are with moneysupermarket - not sure if they're any good? 

larryclack

Right got you, is there any sort of ratio that is a good rule of thumb for being accepted? I don't want to just keep applying but it's saying my chances are 95% on money supermarket 

larryclack

and there's really no downside to being turned down on a softcheck? 

[Deleted User]

Soft searches aren't visible to lenders.

robber2

larryclack said:

Right got you, is there any sort of ratio that is a good rule of thumb for being accepted? I don't want to just keep applying but it's saying my chances are 95% on money supermarket 

In the particular case you mention the ratio is 1 person gets rejected for every 19 that are accepted. This doesnt really help you as of course you may be the one who gets the rejection.

[Deleted User]

Lenders consider consolidation as debt + debt not debt - debt. So if you have 12k of overdraft and a loan then they consider it as potentially 24k of debt and judge your affordability on that level.

Consolidation isn't the answer really, go to the debt free pages on here for advice on clearing your debt, not borrowing to pay debts further down the line. 

Ebe_Scrooge

Any of the eligibility checkers can, at the very best, only give you a very general indication of your likelihood of acceptance.  It's only when you submit an application that a hard search is performed - at that point, armed with a full picture of your circumstances, the lender will make a decision.

As ZX81 says, ignore your score, it's not used - nor even seen - by any lender.  But regular use of an overdraft is always a red flag.  If you think about it totally objectively, it shows that you're struggling to survive on your current income, so any further lending would be just a further burden on your finances.

To forestall your next question - yes, I know you would use the loan to pay off the existing debts.  But a lender cannot guarantee that you will do that.  They have to make the assumption that you'll use the new loan to jet off to the Bahamas, or put the lot on "Lame Larry" in the 3:30 at Cheltenham.  So when they do their affordability checks, they have to assume that your new loan will be in addition to, not instead of, your existing debt.

Oh, and don't keep applying for further loans willy-nilly.  A couple of applications in a short space of time is generally OK; more than that and it looks like you're desperate for credit - which is a further red flag, and will just reduce your chances of being accepted further still.

larryclack

right thanks, that's all handy info. I did go for one in the end, at 5% rates seem pretty good at the moment and I've got the ability to earn a decent amount more if needed. 

I'll try and resist the urge to stick it all on the closest horse never been a gambler which is a definite positive! 

It'd be nice if the whole shebang wasn't such a dark art, but I guess that would leave it open to all sorts of dodgy applications. 

longjohnjohnson

larryclack said:

right thanks, that's all handy info. I did go for one in the end, at 5% rates seem pretty good at the moment and I've got the ability to earn a decent amount more if needed. 

I'll try and resist the urge to stick it all on the closest horse never been a gambler which is a definite positive! 

It'd be nice if the whole shebang wasn't such a dark art, but I guess that would leave it open to all sorts of dodgy applications. 

If you can earn more, you should have done that rather than consolidate.