Large disparity in loan rates

sourpuss2021

After getting the MSE credit score email I saw I had an 80% chance of a £14k Bank of Ireland loan at 5.1%.

But when I did a soft search with my own bank TSB it gave a less enticing 26.9%!

Why the disparity?

I feel like the latter score is probably more accurate since I’m not a home owner and am registered self employed.  However I have been living in the same address for 12 years and have quite a bit of money going in and out of my account.

My credit score is 871.  I have just £2.7k of debt (interest free credit card and IKEA loan).   My affordability is shown to be very poor, but the loan would be intended to increase self
employed income.

MalMonroe

Hi, just in case you didn't see it, this is what the forum recommends "Remember MSE's stance on loans: 'borrow as little as possible, repay as quickly as possible'."

Your credit score is never seen by anyone other than you.

BUT the facts that you are not a home owner, are self-employed and have £2.7k of debt will raise red flags for most lenders.

If I were you, I would not be applying for any loans right now. Especially as you want the money to "increase self employed income."  I'd be wanting to clear the debt I already have. That's the kind of thing that shows lenders you are serious about money management.

It doesn't really make sense to have a loan so you can have money just lying around.  £14k is a lot of money to have to repay - and will just increase your total debt to £16.7k for no apparent reason. It's not worth it. 

Have a read of the info in this link from this very site -
  
https://www.moneysavingexpert.com/loans/debt-help-plan/

and do contact one of the free debt help agencies listed therein if you feel you need some help.  

I hate to sound pessimistic but sometimes eligibility (soft) checks look great but when you actually apply for the loan, it is declined. And then there's a hard search on your credit reports. 

mdj1876

If you bank with TSP, I would suggest that rate is probably the most accurate! Your bank has access to all your financial history so have the best judgement of your risk level.

An 80% approval for 5.1% which is one of the lowest in the market whilst not impossible, is unlikely in my opinion. 

Tesco pre-approved me for a 6.2% loan last year (current tesco loan but looking to refinance) and then straight up rejected it. My bank was offering me 14.6% at the same time. 

sourpuss2021

Thanks both for your replies.  I’ll hold off getting any loans for now!