Who gets best loan rates

th081

I may need a loan next year for home improvement, hoping not but if we exceed the budget may need to. I did two sift check eligibility quotes for 20k over 5 years. One came to 9.1% the other 8.94% so very similar.

My affordability on the mse checker is very good, i do have 20k at zero percent deals on credit cards with a total of 60k credit avalibale so 30% utilisation. 

My question is how much lower does my credit card debt need to be to get better rates like the headline rates. 

prettyandfluffy

You might be wise to reduce the limit on your credit cards as well as the utilisation, that level of available credit might be working against you.

dumpster_fire2025

Why are you holding £20k in credit card debt? Do you not see that this is an issue?

th081

dumpster_fire2025 said:

Why are you holding £20k in credit card debt? Do you not see that this is an issue?

Yes that was the question, if you read the last paragraph (here it is again) : My question is how much lower does my credit card debt need to be to get better rates like the headline rates

Nebulous2

No-one knows, and if they did they wouldn't tell you. 

Each bank will have their own criteria and these will vary. 

A key metric is your income. Once your debt goes above 50% of your income offers will become tighter. 

I'm not at all convinced by arguments about available credit limits being an issue. I've had credit limits over my salary for at least 20 years. At times my credit limit has been well over twice my income. 

I'm now partly retired, working very part-time, and I'm not getting as big limits as I used to, but I applied for and got 3 new credit cards in the last two months, bringing me up to credit limits around twice my income. 

Another thing to watch out for is eligibility. Lenders have to give the headline rate to 51% of applicants. The top of the table lenders will have a huge amount of good applicants and being in that 51% is harder. Sometimes dropping down to number 4 or 5 in the table makes it easier to get their headline rate, for a very modest change in interest over the top lenders. 

th081

Thank Prettyandfluffy and Nebelous2 you both make some good points, just tried a non headline lender and they offered 7.4%.  

I will continue to reduce the debt outstanding so if I need to apply next year it may be better still.

MEM62

"Who gets the best loan rates?"

Those with a good credit standing who also fit the lenders target market.   

Hoenir

High debt levels diminish the possibility of recovering outstanding debt in the event of default. Unsecured debt naturally has a far higher interest rate than secured. As the bad debt has to be paid by someone. Loans aren't made individually but underwritten as a book.

dumpster_fire2025

th081 said:

dumpster_fire2025 said:

Why are you holding £20k in credit card debt? Do you not see that this is an issue?

Yes that was the question, if you read the last paragraph (here it is again) : My question is how much lower does my credit card debt need to be to get better rates like the headline rates

That doesn't answer the question.

Why are you holding £20k in credit card debt and do you not see this as an issue?

th081

dumpster_fire2025 said:

th081 said:

dumpster_fire2025 said:

Why are you holding £20k in credit card debt? Do you not see that this is an issue?

Yes that was the question, if you read the last paragraph (here it is again) : My question is how much lower does my credit card debt need to be to get better rates like the headline rates

That doesn't answer the question.

Why are you holding £20k in credit card debt and do you not see this as an issue?

Yes I do see it as a issue hence my question, how much lower does my credit card debt need to be to get better rates. Does the why impact the rates?