Increasing my loan eligibility - how?

Dandalf

Hi all,

I've taken a loan eligibility test on various websites, either direct or on here on MSE and basically nobody wants to give me a loan unless it's at an incredibly high rate.

• I'm looking to borrow 10-12,000 over 4/5 years (dependent on rates) for Home improvement

The only thing I can think as to why I'm being outright refused or offered something ridiculous is that last month (January) I opened a new credit card with 0% on balance transfer fees as my old one had now ended its 0% period. If this is the case, how long will lenders see this new credit card as a risk - is there a time limit?

Other stats:

• £48,000 annual salary - started job 6 months ago (probation just ending)
• £975 mortgage - moved into this property 7 months ago so change of address
• No missed payments/CCJs or anything of that sort on record
• Have multiple direct debits for utilities, phone bill etc and no missed payments
• Credit card 1 with £3850 limit - £100 remaining, transferred majority to 0%
• Credit card 2 with £5700 limit - has £3800 debt (£3700 transfer from CC1 + transfer fee)

Any other tips on how I can improve my eligibility for this loan please? Repayments obviously aren't an issue based on salary vs outgoings. My only thought is the new credit card opening.

I know it means nothing, but my credit score is good with no alerts etc on it.


Thanks!

MorningcoffeeIV

The recent card could be a factor, but only a minor one.  

The £100 on an interest bearing card could be another. If you can't clear a £100 debt to avoid interest, there could be concerns about handing you a loan of thousands.

New job and new address could also be factors.  Are you on the ER (and reflected as such on at the CRAs)? That may be the biggest issue, as your council may not yet have updated.

Have you checked the data (not the alerts or the scores) on ALL your files?

You have fairly low limits on both your cards, so there seems to be a general view that you're not a great risk.

Dandalf

Thanks for your response.

I guess the £100 could be seen negatively. I had £3800 on the card and transferred £3700 of it because the £100 was already scheduled to be paid, so didn't want to risk upsetting it and paying twice etc. That will be completely gone in a couple of days - should I close this account or leave it open with a £0 balance?

CRAs such as ClearScore? I can see that my ER was first updated in July last year (I moved in June) and it's again updated in January for this year as being my current address. Should I be checking this info elsewhere?

Sorry could clarify what you mean by checking the data on ALL files?

Haha I guess that last sentence could be taken 1 of 2 ways, does my lower credit limit indicate I'm high risk for not paying back?

I'd love to be able to rectify these issues in the short term and not have to get a loan that's 29%+ APR!  

MorningcoffeeIV

The other CRAs are Experian and TransUnion.  You need to check those files - especially Experian.

Clearscore only looks at Equifax.

Dandalf

I've just downloaded Experian and can't see anything out of the ordinary on my account with the very limited info it provides you for free. My new credit card is not yet showing on there, but the old one is with the new £100 balance. 

My useless credit score shows 922 out of 999.

Once I've paid off this £100 on CC1, should I close it down?

Nasqueron

Keep the card, spend on it monthly (even just a single shop or car fuel) and pay in full every month, it builds good credit history and useful to have for emergencies and S75 protection

Dandalf

Nasqueron said:

Keep the card, spend on it monthly (even just a single shop or car fuel) and pay in full every month, it builds good credit history and useful to have for emergencies and S75 protection

Silly question/confirmation - I won't incur interest if I pay it off in full every month?

TadleyBaggie

Correct.  

Hoenir

New job. New Mortgage.  

Can the property improvements not wait. 

A lender is going to want to financial stability. 

Dandalf

Hoenir said:

New job. New Mortgage.  

Can the property improvements not wait. 

A lender is going to want to financial stability. 

Not particularly, the place was infested with asbestos absolutely everywhere (+ a multitude of other problems not indentified during survey) and was ripped back to brick. I've exhausted all personal funds on it and it still resembles a building site.

This ~10k will see it over the finish line. At the moment I'm spending every penny on the house with nothing left for anything else so a long term loan with manageable repayments as opposed to 1k every month as currently will help, mainly my mental health! Buy a house they said, it will be fun they said...


On a side note, I've just upgraded to the free trial on Experian and I have one negative on my account that is "You don't have any settled credit accounts". Would paying off that £100 credit card accomplish this?

MorningcoffeeIV

No - never, ever, follow any advice that a CRA gives you.  Unless that advice is to not follow their advice.

Closing that account will tell lenders that only two other lenders trusted you with low limit cards and now one them has changed mind. After all, no-one in their right mind would leave themselves with a single low limit card out of choice.