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  • FIRST POST
    • rhysrussell91
    • By rhysrussell91 11th Aug 18, 9:05 PM
    • 4Posts
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    rhysrussell91
    In a bit of a credit pickle
    • #1
    • 11th Aug 18, 9:05 PM
    In a bit of a credit pickle 11th Aug 18 at 9:05 PM
    Good evening - thank you for coming across and reading my thread.

    I have encountered a problem and I would like some advice and should anyone have any knowledge on this, it would be greatly appreciated.

    I have recently completed on a house purchase and I am now paying a mortgage. After I had completed on the purchase and began the mortgage term I thought about taking out an additional loan (not secured against the house, might I add) to cover the cost of home improvements, it took a lot of thinking but this is what I wanted to do. I immediately applied and was approved for a loan of x with a reputable company that offered an APR of 15.5% APR and from my past experiences of taking out a loan, I felt this was reasonable and affordable in line with my income.

    My error was that I further researched and found another finance option tailored towards the particular home improvement I was going to be doing - it was attractive as it was 0% interest for the first year and it worked out to be a lot more affordable. It is at this point I felt that the initial loan affordability seemed a lot less attractive. I therefore decided to withdraw from the initial loan, within the 14 day cooling off period, and I have applied for the much more attractive 0% finance package.

    I suppose my questions are: How quickly do the lenders report to the credit reference agencies? Will my new application be affected by the initial loan application? (I can see that my Experian credit report does not list my new loan in my report), I have a very good credit history and have never been late with a payment, will this have a negative impact on my report?
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    • zx81
    • By zx81 11th Aug 18, 9:15 PM
    • 19,679 Posts
    • 21,076 Thanks
    zx81
    • #2
    • 11th Aug 18, 9:15 PM
    • #2
    • 11th Aug 18, 9:15 PM
    The search will show and the new account, depending on timings. Coupled with the mortgage this may be an issue for some lenders.

    Also, given that you were happy with an extremely high rate loan, suggests your credit history and circumstances may be actually be a little patchy.
    • rhysrussell91
    • By rhysrussell91 11th Aug 18, 10:07 PM
    • 4 Posts
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    rhysrussell91
    • #3
    • 11th Aug 18, 10:07 PM
    • #3
    • 11th Aug 18, 10:07 PM
    Thank you for your response. How might a high interest rate loan make a credit report patchy?
    • Gary_Dexter
    • By Gary_Dexter 11th Aug 18, 11:13 PM
    • 2,760 Posts
    • 1,569 Thanks
    Gary_Dexter
    • #4
    • 11th Aug 18, 11:13 PM
    • #4
    • 11th Aug 18, 11:13 PM
    Suggesting your credit history looks patchy.

    Do you have any outstanding debts - defaults, late payments, credit cards carrying balances etc?
    • rhysrussell91
    • By rhysrussell91 12th Aug 18, 12:06 AM
    • 4 Posts
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    rhysrussell91
    • #5
    • 12th Aug 18, 12:06 AM
    • #5
    • 12th Aug 18, 12:06 AM
    Thank you for your reply.

    I do not have any outstanding dates, late payments or defaults and never have I had any - my credit history is clean and according to Experian my score is currently showing as 945/999. The only outstanding debt I have now is a mortgage (excluding the loan I have just withdrawn from). I used to have a credit card which was a credit builder card.
    • madvicker
    • By madvicker 12th Aug 18, 1:09 AM
    • 146 Posts
    • 101 Thanks
    madvicker
    • #6
    • 12th Aug 18, 1:09 AM
    • #6
    • 12th Aug 18, 1:09 AM
    To answer your questions:

    1. It's about a 6 week cycle for new information to reach Credit Reference Agencies.
    2. Yes, but how much no one can say. Although you have recently got a mortgage and made 2 loan applications, which most lenders won't view in a positive light.
    3. It will be a negative bit of credit history for about 6 months.

    15.5% APR is a very high APR loan for anything above 5000. My advice would have been to apply for the 0% finance before cancelling the finance you already have in place. That way you will still have finance in place should they decline your second application.

    How much are you looking to borrow?
    • Craig1981
    • By Craig1981 12th Aug 18, 7:51 AM
    • 565 Posts
    • 279 Thanks
    Craig1981
    • #7
    • 12th Aug 18, 7:51 AM
    • #7
    • 12th Aug 18, 7:51 AM
    with a good credit history and affordability, a good APR would be from 3% to 9% (i believe)

    15.9% APR is what companies like AQUA offer on their loans. high risk borrowers

    glass half full - much better than payday and other short term loans!
    • Craig1981
    • By Craig1981 12th Aug 18, 7:52 AM
    • 565 Posts
    • 279 Thanks
    Craig1981
    • #8
    • 12th Aug 18, 7:52 AM
    • #8
    • 12th Aug 18, 7:52 AM
    on another note - how much is the amount borrowed? would it not be easier to see about 0% purchase credit cards? this will be dependant on amount borrowed and time frame to pay it off
    • macman
    • By macman 12th Aug 18, 6:24 PM
    • 42,800 Posts
    • 18,043 Thanks
    macman
    • #9
    • 12th Aug 18, 6:24 PM
    • #9
    • 12th Aug 18, 6:24 PM
    So what is the APR after the interest-free year? And what is the loan term?
    The saving in the first 12m may well be wiped out after then: what matters is the total cost of the loan over the full term.
    No free lunch, and no free laptop
    • Carrot007
    • By Carrot007 12th Aug 18, 6:30 PM
    • 1,855 Posts
    • 1,615 Thanks
    Carrot007
    The saving in the first 12m may well be wiped out after then: what matters is the total cost of the loan over the full term.
    Originally posted by macman

    Or to get your head out of the sand and transfer to a better rate if it becomes available to you.
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