IVA & Debt Consolidation Advice

Today, lenders are rejecting loans to more and more of those who apply for one due to their poor credit.

Research from Moneysupermarket shows that of all those who apply for a loan, 4 out of 10 are rejected right off the bat. In fact, only one in four who apply for a loan actually get one. It has also been shown that it now takes longer to get a loan, then it did just a few years ago. For the lucky few that actually get a loan, they may not get the interest rate that they expect. Almost 1 in 5 or 20% of those who actually get a loan are offered a higher APR because their credit is not up to par with the lender’s standards.

Stuart Glendinning, managing director of Moneysupermarket, says: “Our research shows many customers are wasting their time applying for loans with the cheapest rates. Worse still, by applying with the wrong lender they harm their chance of obtaining a loan with another provider. To add a further problem, 85% of the top 20 providers offer their 'typical' rates on a price-for-risk basis which means the vast majority of customers apply for a loan with little knowledge of whether they will be accepted or even what rate they will be offered.”

Office of Fair Trading guidelines say, “lenders have to offer their 'typical' rate to two thirds of accepted applicants.” However, many lenders have found a loophole in the system and are getting around this guideline by not announcing their loan rates in advertisements.

For example, Halifax and the Bank of Scotland no longer advertise their loan rates to customers for branch-based loans, while HSBC no longer announced their loan rate on their company web site.

Being rejected for loans also hurts your credit as it is placed on your credit records and you are less likely to get a loan in the future if your credit report shows that you have applied for many loans in the past, regardless if you got the loan or not.


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