26 Feb 2015

A question about : Advice please- tactics for the credit rating maze

My staus:
Self employed, Ј30k+ pa but fluctuates e.g. Ј7k one month then nothing for 2 months.
Partner also earns but unproveable.
Together we rent privately, so no mortgage.
Bank current account - will only allow me Ј500 o/draft. Switch Debit Card.
Only debt Personal Loan with same bank, currently Ј11k settlement figure.
No savings. A bit of Personal Pension.
Had Access many years ago.
Had credit card with same bank for 1 yr 1999-2000, ran up big debt, hence the Personal Loan.

My plan:
[1] For 2 months have had Egg Card [1] (0%SBT) serving as overdraft facility, ready to transfer cash to current account when needed because of income fluctuation, repaid asap.

[2] Currently applying for Lloyds TSB Current Account [2] (5.5% paid on credit up to Ј2500, requires Ј2k paid in each month), the Ј2k supplied from Egg Card [1] when needed because of income fluctuation, repaid asap.

[3] Currently seeking 3.9%LOB card(s) to pay off the Ј11k Personal Loan, continuing to repay at Ј250 pm for 4yrs. Grab 3.9%LOB while it lasts, rather than switching between 0% offers, which may dry up.

[4] Get medium-access savings account for any income which would exceed Ј2500 balance if left in the [2] current account.

[5] Get cashback card for spending, paid off in full each month from current account [2], leaving income earning interest longer in current account.

[6] In fact, SBT to/from Egg Card [1] to keep current account [2] balance near Ј2500, and keep Egg Card [1] max'd into savings account [4].

[7] Beyond that, a bit of super-tarting into a Cash ISA.

[8] And/or business borrowing at 3.9%LOB via Amex Blue Card [9] (5% cashback in first month).

Sounds good, but am stalled at [3], and even [2] isn't in place yet.

After receiving the 0%SBT Egg Card [1], applied for MBNA Card [10] (0%SBT) to add more credit limit to pay off the Personal Loan. They wanted bank statements as proof of income, which unfortunately showed xs o/draft. They refused, for that reason. Appealed, explaining the xs, but still no.

Applied for CapitalOne Platinum Card [11] (3.9%LOB) but they only offered CapitalOne Standard Card [12] (5.9%LOB, 0% on purchases for 6 months). Invited me to appeal.

Applied for Texaco Card [13] (3.9%LOB). Refused, no invitation to appeal.

Both CapitalOne and Texaco advised me to send for copy of my Experian info. CapitalOne said "they will have made a record of our enquiry but they will not know about our decision".

Before any more applications, can anyone throw light on how I stand? Is it because I'm renting/self employed/cohabiting? Do they guess that I'll avoid paying interest/charges? Do they know about my Personal Loan, occasional xs o/draft, low o/draft limit, old credit card overspending? (none showed on my last Experian enquiry). Or is it because of lack of info/track record?

What's my next move? Must I improve my credit rating? Given my basic status above, how? Perhaps run my Egg Card immaculately for a year, to create track record. What would that mean - paying off in full every month, or just paying the minimum every month?

Or just apply for more card(s) e.g. Barclaycard Platinum [14] (2.9%LOB plus 1% fee); iPledge Card [15] (3.9%LOB); Lloyds TSB Advance Card [16] (0%BT till Aug05, like Barclaycard platinum) as I'll hopefully have their current account.

Maybe should take up CapitalOne Standard Card [12] (5.9%LOB, 0% on purchases for 6 months) while it's offered - but I want to re-apply for their Platinum Card [11] (3.9%LOB) in due course.

Note: I've posted separately on Credit Cards: Credit Card or Loan? (how do I do this with hyperlinks?) about 5.9%LOB versus 6.2% Personal Loan.

And/or Amex Platinum Card [17] (up to 2% cashback) for purchases [5] - could I then also apply for Amex Blue Card [9] when the time came for business spending?

I'm confident that you guys out there will have the answers!

Best answers:

  • The reasons for refusal could be because your income is not constant, it could be because you are self employed (you don't say in what capacity or for how long), it could be because you don't own your own home, your debts exceed the levels at which the lender feels comfortable, you haven't given full details on the application form and they are seeing other things on your credit reports. In short, a combination of a whole host of different possibilities, its impossible to say for sure.
    What to do?
    Well, first step is to stop applying. One refusal usually leads to another and if you keep on applying it will just make you look desperate for credit. Get your equifax and experian files (cost Ј2 each by post but can be ordered online). Study them and make sure there are no mistakes and that they are up to date. Make sure that any financial associations are valid (you can easily get linked to previous tenants, family or neighbours even if you are not financially linked to them). Sometimes this can be good if the other party have a good rating but other times it can be very bad (e.g. what if the previous tenant was an undischarged bankrupt). Do what you can to improve your credit worthiness (get on the electoral register, close any unused or dormat accounts etc..) then call one of the lenders who refused you and ask them to reverse their decision or at the very least explain it to you.
    HOWEVER, you say you want to pay off a personal loan early but you do not state that you have obtained a settlement figure. Many loans are structured in such a way that early repayment does not save you money, if this is the case it may be pointless to clear it.
Категория: