Why can't I get a loan? Help needed!

chris50337

Hi

I have been turned down for a couple of loans and I'm getting desperate - I don't want to keep applying because this will make my chances even worse but without a loan I won't be able to move house, and I have been told by my landlord I have to leave (think they want to sell, whole other story but I'm not exactly sad to move out).

The things that go against me: been in my job only 6 months, same story with my flat (the only reason I moved was to take up this job after Uni). My credit reports are all faultless too, never missed a payment (although have had a couple of overlimit charges on one credit card after ASDA decided to wait a month before processing my CC payments from the petrol).

Incomings:
24k wages a year (£1516 a month after tax)

Commitments (per month):
Natwest Loan: £136 (4200 outstanding)
Halifax / Natwest CC: £80 (3600 outstanding)
Rent: £500
Council Tax: £88
Others (contacts, Internet, car insuarance etc): £60

So that's £864 going out and £1516 coming in.

I also have a £2k student overdraft which Natwest will take £1000 from in the summer. AND I've been told I need to leave my flat by Arpil.

I was after a loan of £10k to clear all these debts, help me move house and only have one outgoing. Over 5 years the repayments would be around £190-200, so my outgoings would reduce and I would be paying back less overall. Financially, this makes perfect sense. NatWest (my bank) refused. Halifax refused. As did Sainsburys and RBS.

So why can't I get credit? How does moving house and taking a better job make my credit score worse? Who is likely to accept me? Why is this really such an unreasonable request? I don't want to have to resort to things like Ocean Finance.

(Incidentally, NatWest had no problems handing me a £5k loan when I was a student and only working 12-16 hours at minimum wage)

liz_uk

Hi there.. when I applied for a £10k loan I was refused twice.. when I applied for a £7.5k loan, they gave it to me at a rate of 6.9%.

Are you able to apply for a smaller loan??

chris50337

Thanks for your reply. I spent time working on my finances and calculating how much I need so less than 10k probably wouldn't help - 7.5k wouldn't help clear all of my debts and reduce my outgoings, which is the main purpose of applying.

Incidentally, when I select the reason for the loan am I more likely to be accepted if I say it's for a new car or something, rather than clearing other debts?

Sup3rArsenal

Moving house and job does have an affect on your credit rating as it does not show stability.

Also if you are making a few applications then this also has an adverse affect on your score as well.

It may be an idea to check your credit file, you can do this free of charge. See how many searches and see how all your credit looks on there. This may give you an idea of what you can do.

I am sure i saw on the money supermarket that you can get a search done without this leaving a footprint and they will give you an idea of who will accept you and that companies 'headline rates'.

Headline rates are the best rate that the company will offer (and the one they advertise with) but you may not get.

CLAPTON

Basically potential lenders will see you as someone with about 10k worth of debt wanting to increase it to 20K so will probably see you as overextended (I'm assuming your credit file are otherwise OK and you are on the electoral roll etc)

you clearly do not need a 10k loan and might well be better to try a more piecemeal approach... say try to get a LOB CC or 0% CC to BT the CC debt to.

Also I would suggest you draw up a detailed budget and look for ways of reducing spending so you have more money to pay back the debts faster.
Maybe you could get a parttime job to help throw as much as possible at the debts.

jonesMUFCforever

I would ask the Natwest where you already have an existing loan.
If your credit history is as squeaky clean as you say then you should have no trouble in getting another loan from them.

chris50337

CLAPTON wrote: »

Basically potential lenders will see you as someone with about 10k worth of debt wanting to increase it to 20K so will probably see you as overextended (I'm assuming your credit file are otherwise OK and you are on the electoral roll etc)

you clearly do not need a 10k loan and might well be better to try a more piecemeal approach... say try to get a LOB CC or 0% CC to BT the CC debt to.

Also I would suggest you draw up a detailed budget and look for ways of reducing spending so you have more money to pay back the debts faster.
Maybe you could get a parttime job to help throw as much as possible at the debts.

Will the lenders still see it this way even when I indicate I want to pay the existing debts off with this loan? Should I exclude details of repayments I plan to wipe out with the loan?

My credit file is fine, never missed a payment, on the electoral roll, have history on going back four years at least.

I have 0% on one credit card, and I'm paying £65 a month off that. My only plan would be to just pay the minimum on the card with the lowest balance (but highest interest) and pay extra on the 0% card until there is enough credit to do a balance transfer. 0% is until next August I think. Would I be likely to be accepted for another credit card if I can't get a loan?

I have thoroughly budgeted but that's for the long term. A loan on a decent APR would clear all of my debts more quickly, and cost less in the long run. My point is I need a lump sum for about a month until I get my old deposit back, so I can pay a new deposit and move my things. The new deposit will be more than I will get back on my old one too. A second loan would push my total outgoing up so I thought it would make more sense to take one big loan and clear everything off.

So I can't see how I can do it without a loan. Part time work is not going to be possible when I'm in the office all day and don't get home until 18.30. So a loan seems to me to be the only way. It's not a rash decision.

jonesMUFCforever

What about asking the Natwest about a new loan?

chris50337

They were the first place I tried, I said that in the opening post

CLAPTON

I see no logic in paying the extra on the 0% debt rather than the high APR debt
I see no logic in transferring 0% CC to interest bearing loans


But without seeing the full details of your spending and the full debt details (amounts, APRs, minimum month payments, etc etc ) its difficult to give further advice.

chris50337

I appreciate your help.

My reasoning was that the 0% expires in August so I want to clear as much as I can before then, current balance being £3100. Afterwards the interest is about 13.9%. The high interest has £500 outstanding, so even though the percentage is more the actual amount isn't as much over the next six months. I would do a balance transfer after 6 months.

In theory this means (for the next 6 months) paying 18.9% on £500, making minimum payments of £11 and paying 0% on £3100, paying about £90.

Afterwards, I would transfer the remaining from the high interest card and I would be paying 13.9% on approx £2900-3000.

The other scenario would be making minimum payments on the £3100 (about £60 a month) and paying £40 a month on the high interest £500. I would still be paying for that in 1 year 2 months, whilst only making the minimum payments on the £3100 (by which time the interest would be 13.9%).

I don't know if that makes it any clearer. I maybe should have specified the exact amounts on each card earlier, thanks for replying though.