First Loan Application and Self Employed

sarahj1990

I want to apply for my first loan. I have been reading the posts in the Loan forum. I was surprised to read that the lenders don't take your credit score into account. I want to borrow £6,000.00. The only money I owe is £2,100.00 on my credit card which is 0% interest for the next 12 months as I did a balance transfer. I have not made a late payment for the last 10 years and have a good credit history. I read in one of the other posts that someone got refused the loan because they were constantly using their overdraft. Will the lenders look at the constant debt on my credit card as a negative.

[Deleted User]

The debt will certainly be a factor, although better than if it was interest bearing. If you're also in your OD, that's also high risk behaviour.

Lenders don't use CRA credit scores as CRAs don't know what sort of customers lenders want, or which risk factors are important. Lenders will assess you against their own criteria.

Your income is also going to be a factor. 

What is the loan for? There are always other routes.

sarahj1990

I am not using my OD. The loan is for home improvements. I have been self employed for the last 15 years, taking this into account what documentation will the lender ask to see.

[Deleted User]

The issues of debt and income remain. What income did you declare?

How much are currently able to save each month?

sarahj1990

£50,000 per year. I can save a few hundred a month. The monthly repayment on the loan was £110.00

[Deleted User]

Your income looks sufficient, but the lender may be querying why you're carrying debt and need a further £6k loan.

If you're saving a few hundred each month, it would be simpler and cheaper to just take it out of your savings.

If you're determined to pursue the loan, make sure your check the data on all three CRAs.

sarahj1990

Will they ask to see evidence of my 50K earnings as I have been out of the UK for 9 months in the last 2 years and earnt less due to covid but am earning the 50K now.

[Deleted User]

They might. Different lenders have different policies.