Loan Refusal, don't know why.
Discussion
The Mrs is trying to buy a car at the moment after writing off her last one. £14k for the car 6500 paid out, £500 deposit, so £7k to borrow.
She has no other loans and a few k on CC (all up to date).
After essentials are paid she has about £1000 for food, drink, travel and other discretionary spending. So plenty basically.
Lived in this house for 5 years and 12 years in the previous house.
Sainsburys who we asked for the loan said 2 interesting things (when she made initial enquiries)
1. She had changed her name in 2009 (we married in Nov 2008) and therefore records only go back to the 1st entry on the electoral roll. Which sounds odd to me, we have a marriage certificate.
2. Because it is a join mortgage she needs to be able to pay it herself in case I run off?
Baring this in mind she did a join application and was still refused (I earn more, have slightly higher commitments but about the same disposable at the end of the day).
Bit frustrated by this, neither of us have ever had a problem borrowing before. Any advice or a new approach for us.
She has no other loans and a few k on CC (all up to date).
After essentials are paid she has about £1000 for food, drink, travel and other discretionary spending. So plenty basically.
Lived in this house for 5 years and 12 years in the previous house.
Sainsburys who we asked for the loan said 2 interesting things (when she made initial enquiries)
1. She had changed her name in 2009 (we married in Nov 2008) and therefore records only go back to the 1st entry on the electoral roll. Which sounds odd to me, we have a marriage certificate.
2. Because it is a join mortgage she needs to be able to pay it herself in case I run off?
Baring this in mind she did a join application and was still refused (I earn more, have slightly higher commitments but about the same disposable at the end of the day).
Bit frustrated by this, neither of us have ever had a problem borrowing before. Any advice or a new approach for us.
It's a bit of a minefield at the moment. Different funders have 'red flags' for lots of silly things.
Sainsbury’s I would imagine are running a very low risk portfolio at the moment, aside from any nasties that have been stuck on your file you don't know about it could be a simple as 'worst case scenario' she couldn't pay it. For example if she has a 10k OD limit, but doesn't use it, a 20k CC limit and only uses 2k and a joint mortgage of £2k a month (clearly made up figures) Their scoring system might be quite harsh and computes a WCS as
You leave or die uninsured, fixed costs double, in a panic she ramps up the OD and CC over the next few months and the cost of paying the mortgage plus the min on 20k of CC debt and 10k of OD debt is more that her take home pay minus normal living expenses - declined.
CC can be a bit of a double edged sword at the moment, if your CC company has kindly given you a limit you could never afford to service because you’ve been with them decades and always pay on time a potential lender might consider that you might go mental one day and buy a yacht on the Visa and wouldn’t be able to pay them back.
If, your credit file comes back as you expected just shop around for the right funder, just because they turn you down doesn’t mean another very low risk lender will too, they all have specific lending criteria and with these very low risk / low margin lenders there’s generally no human underwriter able to input a bit of common sense into the mix.
Also all lenders have there own criteria, but multiple ‘hits’ aren’t a major scoring thing for any I know, since the advent of moneysupermarket et al and people shopping around for the best deals more and more, plus so many organizations credit score now utilities etc it’s not uncommon for a good customer to get loads of hits in 12 months.
Sainsbury’s I would imagine are running a very low risk portfolio at the moment, aside from any nasties that have been stuck on your file you don't know about it could be a simple as 'worst case scenario' she couldn't pay it. For example if she has a 10k OD limit, but doesn't use it, a 20k CC limit and only uses 2k and a joint mortgage of £2k a month (clearly made up figures) Their scoring system might be quite harsh and computes a WCS as
You leave or die uninsured, fixed costs double, in a panic she ramps up the OD and CC over the next few months and the cost of paying the mortgage plus the min on 20k of CC debt and 10k of OD debt is more that her take home pay minus normal living expenses - declined.
CC can be a bit of a double edged sword at the moment, if your CC company has kindly given you a limit you could never afford to service because you’ve been with them decades and always pay on time a potential lender might consider that you might go mental one day and buy a yacht on the Visa and wouldn’t be able to pay them back.
If, your credit file comes back as you expected just shop around for the right funder, just because they turn you down doesn’t mean another very low risk lender will too, they all have specific lending criteria and with these very low risk / low margin lenders there’s generally no human underwriter able to input a bit of common sense into the mix.
Also all lenders have there own criteria, but multiple ‘hits’ aren’t a major scoring thing for any I know, since the advent of moneysupermarket et al and people shopping around for the best deals more and more, plus so many organizations credit score now utilities etc it’s not uncommon for a good customer to get loads of hits in 12 months.
Whatever you do, don't start sending off applications to willy nilly companies. Every application is shown against your credit history, a surge of applications would be more of a sign of 'desperation' than anything else.
1) Have you tried your bank? It may not be the most appealing rate, though you would have established a relationship with them over the last x years.
2) Have you considered a credit card? MBNA offer 0% interest rates for Balance Transfers. A standard Balance Transfer would be used to pay off another credit card, MBNA are different though, as they actually deposit the monies into your bank account. There's usually a 3% fee for this, but you do the maths, 3% vs a 7% loan over 12 months = no brainer.
3) Dependant on the amount you wish to pay off, let's say £3.5k in the first year, you'll then have to 'shift' the remaining balance to another card. Again, it's likely you'll pay a 3% fee (3% of £3500) which is far better than the 7% you would be getting charged from the other provider.
Now, herein lies the problem, it's advised you already have a credit card which you can shift the balance to. You don't want to be stuck in 12 months time paying 15% APR on the £3.5k if you can't shift it, although frequently, it's still cheaper than the flat rate of 7% over the 2/3 years!
I;v always found MBNA to have very generous credit limits also
Thought I'd make my 2000th post a helpful one.
Also. have a look here: http://www.moneysavingexpert.com/cards/balance-tra...
1) Have you tried your bank? It may not be the most appealing rate, though you would have established a relationship with them over the last x years.
2) Have you considered a credit card? MBNA offer 0% interest rates for Balance Transfers. A standard Balance Transfer would be used to pay off another credit card, MBNA are different though, as they actually deposit the monies into your bank account. There's usually a 3% fee for this, but you do the maths, 3% vs a 7% loan over 12 months = no brainer.
3) Dependant on the amount you wish to pay off, let's say £3.5k in the first year, you'll then have to 'shift' the remaining balance to another card. Again, it's likely you'll pay a 3% fee (3% of £3500) which is far better than the 7% you would be getting charged from the other provider.
Now, herein lies the problem, it's advised you already have a credit card which you can shift the balance to. You don't want to be stuck in 12 months time paying 15% APR on the £3.5k if you can't shift it, although frequently, it's still cheaper than the flat rate of 7% over the 2/3 years!
I;v always found MBNA to have very generous credit limits also
Thought I'd make my 2000th post a helpful one.
Also. have a look here: http://www.moneysavingexpert.com/cards/balance-tra...
Edited by I Love Lamp on Wednesday 22 December 11:46
Bullett said:
We got the credit report - clean as a whistle.
Applied to Zopa (I borrow and loan on there) and approved inside 24hrs with a 7.35% rate.
Interested to hear about your experiences of Zopa if you get a minute to tell us. I have just been to their site and might give it a punt.Applied to Zopa (I borrow and loan on there) and approved inside 24hrs with a 7.35% rate.
Cogcog said:
Bullett said:
We got the credit report - clean as a whistle.
Applied to Zopa (I borrow and loan on there) and approved inside 24hrs with a 7.35% rate.
I'd like to hear about your personal feelings of lending through Zopa too if you had a spare 5 minutes.Applied to Zopa (I borrow and loan on there) and approved inside 24hrs with a 7.35% rate.
Interested to hear about your experiences of Zopa if you get a minute to tell us. I have just been to their site and might give it a punt.
Borrowing - Good rates and efficient process. They seem to have a more hands on approach and don't totally rely on credit scoring services. MY wife was approved with no further data requirements. With a loan I took they rang me and asked a couple of additional questions (very reasonable ones and not unexpected in the circumstances).
Lending - I don't have much in there (a few hundred) but I'm ramping up slightly putting an extra 50 a month in. You have 2 choices for loaning a default mode where you set a % rate/term and then they automatically assign your money to loans like mine. Obviously if you set a high % then you get a better return but it might take longer to loan out. Plus the higher rates go to riskier clients. You normally lend between £10 - 100 to each client, so the risk is spread.
Otherwise you can lend to a specific person in a kind of reverse auction. They list costs/expenses and risk you ask questions and make a bid. Any amount you like can be loaned, up to the requested amount.
Until recently your money was tied up until all paid back. But there is now a way of getting money out sooner but I've not looked into the details.
Lending - I don't have much in there (a few hundred) but I'm ramping up slightly putting an extra 50 a month in. You have 2 choices for loaning a default mode where you set a % rate/term and then they automatically assign your money to loans like mine. Obviously if you set a high % then you get a better return but it might take longer to loan out. Plus the higher rates go to riskier clients. You normally lend between £10 - 100 to each client, so the risk is spread.
Otherwise you can lend to a specific person in a kind of reverse auction. They list costs/expenses and risk you ask questions and make a bid. Any amount you like can be loaned, up to the requested amount.
Until recently your money was tied up until all paid back. But there is now a way of getting money out sooner but I've not looked into the details.
Bullett said:
Borrowing - Good rates and efficient process. They seem to have a more hands on approach and don't totally rely on credit scoring services. MY wife was approved with no further data requirements. With a loan I took they rang me and asked a couple of additional questions (very reasonable ones and not unexpected in the circumstances).
Lending - I don't have much in there (a few hundred) but I'm ramping up slightly putting an extra 50 a month in. You have 2 choices for loaning a default mode where you set a % rate/term and then they automatically assign your money to loans like mine. Obviously if you set a high % then you get a better return but it might take longer to loan out. Plus the higher rates go to riskier clients. You normally lend between £10 - 100 to each client, so the risk is spread.
Otherwise you can lend to a specific person in a kind of reverse auction. They list costs/expenses and risk you ask questions and make a bid. Any amount you like can be loaned, up to the requested amount.
Until recently your money was tied up until all paid back. But there is now a way of getting money out sooner but I've not looked into the details.
Do they pay any interest on unloaned money or repaid money?Lending - I don't have much in there (a few hundred) but I'm ramping up slightly putting an extra 50 a month in. You have 2 choices for loaning a default mode where you set a % rate/term and then they automatically assign your money to loans like mine. Obviously if you set a high % then you get a better return but it might take longer to loan out. Plus the higher rates go to riskier clients. You normally lend between £10 - 100 to each client, so the risk is spread.
Otherwise you can lend to a specific person in a kind of reverse auction. They list costs/expenses and risk you ask questions and make a bid. Any amount you like can be loaned, up to the requested amount.
Until recently your money was tied up until all paid back. But there is now a way of getting money out sooner but I've not looked into the details.
Not on unloaned money, although you if you have money sitting there then your lending rules are not working for some reason.
Everytime my repayments build up to £10 it goes back out again.
The client pays the interest over the loan period. So if you lent someone half you'd get back all your money plus the interest due on that half.
Edit to add (from Zopa FAQs) - Lenders pay an annual equivalent 1% fee on the amount they lend to borrowers. The fee is accrued on a daily basis equivalent to 1% p.a. and deducted monthly from their holding account balance. They are not charged for money which has not been lent out.
Here is an example: A lender lending £1,000 at 7% would earn £70 of interest each year if the money is always lent out and paid back. They would pay a fee of 1%, or £10, in total.
We deduct the fee from the holding account balance on a monthly basis (27th of each month).
If a borrower defaults on part of their loan, the lender is not charged a fee for that part - that would be stupid. And similarly, if a borrower repays early, the lender pays no fee on the portion of the loan that has been repaid.
Everytime my repayments build up to £10 it goes back out again.
The client pays the interest over the loan period. So if you lent someone half you'd get back all your money plus the interest due on that half.
Edit to add (from Zopa FAQs) - Lenders pay an annual equivalent 1% fee on the amount they lend to borrowers. The fee is accrued on a daily basis equivalent to 1% p.a. and deducted monthly from their holding account balance. They are not charged for money which has not been lent out.
Here is an example: A lender lending £1,000 at 7% would earn £70 of interest each year if the money is always lent out and paid back. They would pay a fee of 1%, or £10, in total.
We deduct the fee from the holding account balance on a monthly basis (27th of each month).
If a borrower defaults on part of their loan, the lender is not charged a fee for that part - that would be stupid. And similarly, if a borrower repays early, the lender pays no fee on the portion of the loan that has been repaid.
Edited by Bullett on Sunday 2nd January 12:18
10AE said:
Big fan of Zopa as a lender, I don't have much in it at the moment but have been doing it for about a year and my returns have been far, far better than I would have got from a savings account. I only lend to A*/A markets and have yet to experience any bad debt.
Sounds like a good place for regular saving.OP.
Expect to start receiving cold calls from debt consolidation companies. Out of idle curiosity I checked to see what a personal loan would cost me (I have a car project in mind and thought about borrowing rather than selling one) since when I've been pestered by the buggers. The last one prattled something about wanting to help me seeing as how I'd been refused a loan. Put her straight and then told her to never call me again. They will though
Expect to start receiving cold calls from debt consolidation companies. Out of idle curiosity I checked to see what a personal loan would cost me (I have a car project in mind and thought about borrowing rather than selling one) since when I've been pestered by the buggers. The last one prattled something about wanting to help me seeing as how I'd been refused a loan. Put her straight and then told her to never call me again. They will though
Double post alert.
As if by magic... Another call this morning from <strong Indian accent> "...Mark Villiams..." who was calling me about someone at my home maybe having had some kind of accident some time in the last two years. Maybe. I told him it was news to me and that I'd like full details but first, his real name. 'Mark' became a little upset causing him to lapse into Urdu and after several repeated requests for his real name put the phone down on me.
I feel rejected
As if by magic...
Another call this morning from <strong Indian accent> "...Mark Villiams..." who was calling me about someone at my home maybe having had some kind of accident some time in the last two years. Maybe. I told him it was news to me and that I'd like full details but first, his real name. 'Mark' became a little upset causing him to lapse into Urdu and after several repeated requests for his real name put the phone down on me.I feel rejected
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