Reply to: Unsecured Loans and "representative" APR

[Churchill]

...but they will not state this as a reason for 'failure' - I have 978 of 999 points on Experian which is an almost perfect credit rating yet First Direct will not give me an account - they stated their internal credit checks come up with a refusal and will not state what the item refusing is 'as it will cause fraudulent applications'.

I understand now that I am worthless to them but why can't they say that rather than give of some mystery BS credit story

What's your Equifax rating?

[Paddy]

I've recently applied for three unsecured loans with diff banks/companies for "representative" APR of 6.6% or thereabouts. However when it comes back that I've been successful it is no where near 6.6%, more like 9 or even 10% from Santander! (And yet I am already a customer to them) AFAIAA, I have a very good credit history, checked my file a few years back and all was correct. Have not missed a credit card payment (there was a cockup with my virgin cc but got refunded as it was their mistake - can this go against me?) Or is the low rate just to entice us to apply then bank and people still going ahead with the application even thought apr is signif higher?

Not applying for anymore as too many searches on my credit file is going to harm me.

Anyone else found this, ie - successful loan app but no where near the low APR offered?

qh

The fact that you have applied three times for loans will in itself lower your credit rating. Each time you apply, your credit score is lowered. What you should do is phone the lender first and ask them not to do a credit check but ask for an estimate of the APR using your criteria. Typical APRs are normally a scam as very few people will actually qualify for them.

[AtW]

I've got a £20K limit on my Barclaycard, but then I've been a customer for years and put through about £2K a month on it and paid it off every month in full.

Thought you'd carry a few gold coins instead

[Fishface]

Must be remembered that for each offering a company has, they want a certain type of customer. You may be perfect credit history, good pay and job etc but you may not fit the profile they want. We found a perfect customer was bad as they either took out a credit card and didn’t use it much (if at all) or just rate tarted around. It costed us around £55 a month (quite high in the industry) to maintain a credit card for a customer.

...but they will not state this as a reason for 'failure' - I have 978 of 999 points on Experian which is an almost perfect credit rating yet First Direct will not give me an account - they stated their internal credit checks come up with a refusal and will not state what the item refusing is 'as it will cause fraudulent applications'.

I understand now that I am worthless to them but why can't they say that rather than give of some mystery BS credit story

[NorthWestPerm2Contr]

2 credit cards are absolutely great (both same company):

MBNA

Virgin

I took out Virgin 0% money transfer deal for 4%. So I was able to transfer up to 9k into my account at the cost of 4% over 1.5 years. You can't really get better than that anywhere. I am thinking of taking out MBNA card to help me with a deposit for a house.

[DimPrawn]

Credit Card

Problem is with 0% cards, as a new customer they give you a low credit limit these days of maybe £2K.

I've got a £20K limit on my Barclaycard, but then I've been a customer for years and put through about £2K a month on it and paid it off every month in full.

£2K credit card isn't much use if you are looking for a loan of say £15K.

[MarillionFan]

Use your credit card(s) instead of a personal loan.

Then get one or more 0% balance transfers to new cards (depending on size of amount needed, and credit limit offered).

Work out how the transfer fee (usually around 2.5 to 3%) and monthly payments work out compared to the personal loan repayment period and APR.

If you don't manage to pay off the balance before the 0% deals run-out, either get a better paying contract, or more 0% cards deals.

The bonus is that by paying off these credit cards (as part of balance transferring) you'll get a better credit rating, so better personal loan rates further down the line.

WHS.

Quite a few credit cards are offering a 0% on purchases for 6/9 months. Buy what you needed from a credit card then get one of those and then move it to a 0% for 18months with a 2.5 - 3.0% fee. Bob's your uncle and Fanny's your aunt 2 year loan for 1.5%.

[PAH]

Use your credit card(s) instead of a personal loan.

Then get one or more 0% balance transfers to new cards (depending on size of amount needed, and credit limit offered).

Work out how the transfer fee (usually around 2.5 to 3%) and monthly payments work out compared to the personal loan repayment period and APR.

If you don't manage to pay off the balance before the 0% deals run-out, either get a better paying contract, or more 0% cards deals.

The bonus is that by paying off these credit cards (as part of balance transferring) you'll get a better credit rating, so better personal loan rates further down the line.

[SneakySimon]

Unsecured Loans

I used to work in a credit card company and this was very common to advertise 6.9% but when people apply, then

The other piece is that it depends on the following which is supplied by Experian / Equifax. Electoral register – if your not there, that is bad in banks eyes!
• Any CCJ’s or bankrupts
• Any missed payments / over-limits
• Total debt OS
• Any notes on your file

The data supplied is on a reciprocal basis, so if you are applying to a loan and credit card company, the information they receive from Experian is loans and credit cards only – nothing on a mortgage for example unless you are default on it.

As MarrillonFan points out, if you have no lending then the above info is not available so makes you higher risk as you have no previous form when it comes to lending.

Then the banks made further risk decisions on things you put in your application, such as:
• Home owner / renter (home owners are less risky)
• Age – sub 25 and over 50 are higher risk
• Salary – too low and your high risk as can’t afford to pay, too high and why would you need a credit card
• Number of house moves in last 5 years– someone who moves a lot is riskier
• Type of job – self employed more risky
• Address – live in a dodgy postcode and you are higher risk
• If you request to take out PPI, this actually makes you more risky

Must be remembered that for each offering a company has, they want a certain type of customer. You may be perfect credit history, good pay and job etc but you may not fit the profile they want. We found a perfect customer was bad as they either took out a credit card and didn’t use it much (if at all) or just rate tarted around. It costed us around £55 a month (quite high in the industry) to maintain a credit card for a customer.

With the economic problems of today, the banks are very picky about who they take and the 6.9% is all but for a lucky few now adays!!

[quackhandle]

Cheers for the replies, at 10% maybe I am dodgy? Anyone wanna buy a laptop?

I remember the good old days when capital one were inviting "me" to take out their 5.4% unsecured loans. Certainly helped tank out and renovate my basement.

Not heard of that Zopa before, I'll check it out.


qh

[gingerjedi]

Speak for yourself. I've always got the lowest rate whenever I've taken loans. You actually build a stronger credit rating by borrowing money and using credit then never using it or owing anything.

Same here though I doubt I'd have got those rates if they really understood how precarious my situation was.

[MarillionFan]

That. Almost nobody will get the advertised rate, but the fact that it is in principle available lets them get away with advertising it.

Speak for yourself. I've always got the lowest rate whenever I've taken loans. You actually build a stronger credit rating by borrowing money and using credit then never using it or owing anything.

[NickFitz]

Or is the low rate just to entice us to apply then bank and people still going ahead with the application even thought apr is signif higher?

That. Almost nobody will get the advertised rate, but the fact that it is in principle available lets them get away with advertising it.

[MarillionFan]

I don't want to preach but it's best to avoid debt whilst contracting as you are only ever 24 hours/1 week away from having zero income.

I'm talking from my own stressful experience.

Yes but most contractors are willing to work away from home to whit you're not so flexible so it's not a good example.

Try Zopa. Average is around 6-7% at the moment. They'll also grade you so you can see your credit worthiness

[DimPrawn]

Try Zopa, cut out the b(w)ankers!

Borrow money from Zopa lenders - Peer to peer lending with Zopa.com