Declined for Barclays Loan based on Current Account Activity

Wannabericher

I applied for a Barclay Loan for a car (£9000 over 48 months = £215 per month repayments) and was surprised when I was turned down based on affordability.

I called to check and query this, as I felt I met their eligibility and affordability criteria.

• my income is over £55,000  (joint income is £100,000)
• I am full-time employed
• a homeowner with no mortgage
• my Experian credit score is 985/999
• I transfer over £700 to Barlcays savings accounts each month
• I have £50k in Barclays ISA* and Savings
• I have been a Barclays customer for 20 yrs
• I have a Barclaycard with a £10k limit (zero balance and don't use it)

I was advised that I was turned down based on affordability and concerns that I couldn't afford the £215 per month.

When I queried this, I was told that although the Barclays staff could see my regular contributions to my savings & the savings balance - they (the underwriters) judge affordability solely on the current account and the funds going in and going out of that account.

I was told that because I move most of my salary out of my current account and into savings and ISA, they don't think I can make the monthly repayments. 

This is not what it says on the barclays website
Here’s what we consider when you apply for a loan – whether your income is high enough to make the payments, your credit score, and how long you’ve banked with us. You also need to have a current account with us or a Barclaycard, live in the UK and be 18 or over.
(barclays.co.uk/loans/personal/)

They also suggest reasons for a loan application to be declined here:
(barclays.co.uk/money-management/guides/declined-by-a-lender/)

NONE OF THE ELIGIBILITY CRITERIA PUBLISHED WARN YOU THAT YOU'LL BE MEASURED ON ONLY YOUR CURRENT ACCOUNT.

What is anyone's thoughts or experiences? 

Have they judged me on the appropriate published criteria or have they been lazy and only looked at my current account and the money in vs money out and made a judgment?

Having a loan application declined has reduced my Experian score!

Before anyone asks... My ISA's are 1yr fixed rate with penalties for withdrawal and the loan is at 6.1% so its cheaper to borrow than pay penalties... And I can borrow from elsewhere (Thanks to Sainsbury's Bank that didn't turn me down.)  But I am furious with being judged not on the information provided on the loan application or on the information that Barclays have available.

Let me know... should I complain (and if so on what grounds) and to whom.  The phone operator said that there was nothing to complain about as they had followed their procedures.

born_again

You make no mention of this being your main account.
eg wages being paid in & monthly bills being paid out.

Will make a big difference if it is not & all they are seeing in funds being transferred in & paid to savings. To them that is your income.

If it's a sole loan JT, income is meaningless as is your credit score. History is more important (missed payments etc)

End of the day a complaint will go no where, as you have not meet their criteria for the loan. FOS can not force a bank to lend to anyone. Even if you took it that far.
Any lender is free to decline anyone. Just like a pub is free to refuse to serve you. 

Forget your credit score lenders do not see it. The only people it's important are the CRA who invent the figure.
Example of how pointless they are is Experian Boost. Makes you score higher by you sharing your day to day banking data with them via open banking.

Brie

You weren't measured ONLY on your current account.  Of course they might not like some of the things that are obvious when they look at your account.  (too many big or small payments and to whom?)  But you were also measured on the fact that you have £10k available to spend on a Barclaycard plus whatever overdraft you might have (whether you are using it or not) plus if you have a monthly phone contract and pay monthly for your motor and/or home insurance.  And possibly also what is on your OH's credit history.  Anyone got a CCJ lurking anywhere?  Are you registered to vote?  

And don't worry about your credit score.  No one looks at it except you.  Barclays certainly don't.

Frankly I don't think there's any grounds for a complaint.  It would need to be on something substantial - someone laughed at you inappropriately or called you a name or somehow insulted you or you suffered some sort of financial detriment.  You haven't said that any of those things happened.  You might raise a "cause for concern" about how your expectation of being a good customer of theirs for so many years haven't paid off.  This, might, if you are lucky get you £10 to go with an apology.  

Hoenir

Wannabericher said:

Let me know... should I complain (and if so on what grounds) and to whom.  The phone operator said that there was nothing to complain about as they had followed their procedures.

Lenders can pick and choose who they do business with. There's no right to being offered a loan. No shortage of lenders in the market. Bigger worries and concerns in life than arguing with a faceless corporate entity. 

Phoenix72

You dry your eyes and move on.

If petty enough you will move all your accounts elsewhere.

Nasqueron

You need to remember that these decisions are done largely by computer, seeing £700 a month going out leaving you with little money available (even though in reality you could save less) means computer says no. Also, lenders don't take into account savings because there is no guarantee you will use them as backup, if they lent you the money today and you spent all the money in the savings that were your "security" for the loan on a world cruise, they would be potentially held liable for unaffordable lending claims.

All that said, if you can put away £700 a month, why are you taking out a loan for 9k over 4 years? Just save for a year and pay cash or use your savings now and pay no interest and put the £700 a month to refilling savings

Wannabericher

Thanks for the responses above.

For the record, (Brie) this was the main account with wages paid in, and a 20yr history.  There are no missed payments or adverse history (CCJs) related to me, the OH or the property.  Mortgage paid off with perfect history.

I guess this is why I was surprised to be declined and the grounds being affordability.  I would have thought that I was a model customer for a loan, and certainly unlikely to defaut.  

However, I acknowledge (as per Nasqueron) that 'Computer says No' purely based on money in and money out (with no allowance for any Savings balances and other accounts) or where the money goes (ie into savings accounts or optional expenditure that can be adjusted/reduced, like pensions and investments).

I guess I am naive and expected the eligibility criteria to be clearer... so perhaps the cautionary tale for others who think that their history and profile will be enough to get a loan (at the best rates).. or trusting the marketing speak on websites.

Hoenir & Phoenix72 are correct... lots of other lenders who are happy to lend (plug for Sainsbury's and First Direct who have approved the loan)... and maybe, if I am upset enough, I can and will move my account away from Barclays.

In the meantime - THANK YOU. 
This forum is for input and advice and is made by those who contribute to it.

Ozzig

Wannabericher said:

Hoenir & Phoenix72 are correct... lots of other lenders who are happy to lend (plug for Sainsbury's and First Direct who have approved the loan)... and maybe, if I am upset enough, I can and will move my account away from Barclays.

Speaking from experience, at least move those savings, Barclays rates are relatively poor compared to 100s of other savings options.

secla

Is there n a reason for not using your savings then repayinging over time ? surely your savings rate is lower than any borrowing rate you are likely to get.

Wannabericher

secla said:

Is there n a reason for not using your savings then repayinging over time ? surely your savings rate is lower than any borrowing rate you are likely to get.

£40k+ are in 1yr Fixed ISAs and I wanted to top those up later to use that tax-free allowance. (There's penalties for withdrawing) And I am getting 5.2% so borrowing at 6.1% meant that the cost of borrowing was very low.

In short, it just seemed really easy to take out a Barclay loan.

prowla

Barclays are a strange lender - they don't seem to want to lend money!

I've had issues with them at Apple Store and Amazon, where they've declined my loan applications.

In the case of the Apple Store, it's happened each time I've gone to replace my last 3 iPhones and I've simply gone out of the shop to an EE or Sky shop and got one there instead (and then gone back to the Apple Store to get a screen protector fitted). On one occasion I bought a new BMW on the same day.

On Amazon they often offer an option to pay interest-free over 3 months, where I think why not... I'd done it a couple of times with their previous lender and all went well, but they shifted to Barclays and I was refused.

My credit ratings are good; it's Barclays.

Now, if I am ever thinking about credit, I check if it's Barclays and just say don't bother.