Credit rejection credit crunch!

[czar]

After much debate went to my local MB dealership to place my order for a new E 280cdi elegance, my new car was sourced from MB stock so the deal was on, paid my deposit to secure the car passed on all relative information for the finance subject to status check, after a complimentary coffee and biscuits I was given the news that I had been rejected for finance (left gob smacked and lost for words) further talks with salesman led me to check my credit profile/score with Experian, upon check my credit profile it was fine so I rang Experian and was told that I might have been refused as I don't have enough credit except my mobile phone monthly contract! Has anybody had this happen and what should I do now?

 

[Seeker_UK]

Ask MB why they rejected the finance as they did it, not Experian.

 

[czar]

Thanks Seeker UK, I will contact MB in the morning and see if I can resolve the problem, it seems to me after much thought as I don't have a motgage anymore (paid off in 2005) and don't have any credit cards or any finance on anything could this be a problem! Do you need to be constantly in debt to gain a good credit score?

 

[d215yq]

A big part of credit scoring in general is gained when money is borrowed and then paid back. If you buy everything on credit card and pay it back on time or even not in full but make a monthly payment this increases the credit score as it shows you can pay off and manage debt as opposed to someone who has never had debt. Not really fair I know but thats how the "credit score" is comprised...

 

[television]

And we wonder why the country is in a mess, I have heard this before. People like us cant get credit because we lead a decent life. Could you do a loan with a bank

 

[Seeker_UK]

Thanks Seeker UK, I will contact MB in the morning and see if I can resolve the problem, it seems to me after much thought as I don't have a motgage anymore (paid off in 2005) and don't have any credit cards or any finance on anything could this be a problem! Do you need to be constantly in debt to gain a good credit score?

To be honest, yes.

If you know how Experian works, look away now...D)

Each month, your creditors report back on how well you are paying back your debt - these are combined into a score (out of 10) - the higher the score per month the better.

When a credit check is conducted, the potential creditor gets a report from Experian (or another credit agency) which shows 2-3 years worth of these monthly scores. They then assess the risk to not getting their money back based on this. If you have no major loans over the last 2 or 3 years, there will be no scores to base an assessment on.

A bit perverse, but if you look at it, quite logical - if we don't know how you repay loans at the moment, how can we guess how well you'd pay a new loan off?

One way to help your case would be, ideally, to start up a credit card and buy everything on it and repay the bill each month.

This will take time so to address your current problem, you need to be able to prove to MB Fianance that you are a low risk borrower. If you can show your income and your monthly outgoings can accommodate your loan (ie show on a bank statement that you save more per month than the propsed monthly repayment) you might persuade them to lend you the money.

Ask MB finance - what wouldthey want to see to get them to finance your car. Be polite but basically point out that if they don't help / agree the loan, they will have lost a sale.

Good luck.

 

[czar]

So d215yq sounds like I need to get myself a credit card run out to the shops purchase lots of man gadgets pay off the monthly bill time and time again to improve my seemingly non exsistant credit score!
Hi Television yes I could possibly get a loan from the bank BIG question is, will they do a subject to status credit check? Maybe catch 22 can't get credit because I have no credit!

 

[television]

Reading you story I hope that I never need credit,. I pay evrey thing off instantly

 

[SQ_W211]

Get yourself a BA Amex card, you have to pay balance every month hence you will always have good history also you earn air miles on the way so treat yourself to a free holiday in a year. I pay off my petrol with BA Amex every month which doesnt charge me interest as i pay the balance off in full but gives me credit history along with Airmiles as a bonus.

 

[PeterCLK]

Do you really need the credit to buy this car? If you can do without, always better IMO.

 

[Seeker_UK]

Reading you story I hope that I never need credit,. I pay evrey thing off instantly

Well it's a good idea to until you do need credit.

We buy everything and I mean everything on a Tesco credit card, fuel, groceries, deposits on cars, rail tickets etc etc and then pay it all off each month. Alhtough this is a bit of a faff, for every £200 that goes on the card, you get £1 off groceries and it ups your credit rating.

 

[television]

Well it's a good idea to until you do need credit.

We buy everything and I mean everything on a Tesco credit card, fuel, groceries, deposits on cars, rail tickets etc etc and then pay it all off each month. Alhtough this is a bit of a faff, for every £200 that goes on the card, you get £1 off groceries and it ups your credit rating.

Well learnt something here then, so I could do that as I use the food and fuel. Thanks, its all in my quest to die owing £5m

 

[kth286]

The flaw in the above is that everyone had to start somewhere without having previously had credit.

So my question is how do you get credit for the first time?

Experian and similar companies have an online facility to ask questions.

Ask how to get credit for the first time.

I am surprised that your mortgage was not on your credit file,

Credit files have your records going back over six years, and you might like to get your file copies from both Experian and Equifax for a cost of just two pounds each and will arrive in approx 5 working days.

Everyone should do this at least once per year as there can be bad stuff on your records due to mistakes and house moves etc etc.

 

[television]

I have nothing David I took out a mortgage in 1964 and paid it off in 1969. lets hope that I never need a loan

 

[czar]

Malcolm it's ok that everything we buy we pay for without the need for credit (just bought a new apple iMac computer) and the young lad looked shocked as I didn't want credit (finance) and was paying for it from my debit card! In the case of funding my first ever mercedes albeit new, rather than loose a chunk of my money and interest the MB deals for me are a good deal at the moment.
Hi Amo Rahl sounds a great idea spending and collecting air miles but again if I applied for the BA Amex card would I get accepted in my situation with seemingly no credit score!
Hi Peter I don't really need the credit but I just think it's a better way to go at the moment as the deals are so affordable.

 

[czar]

My mortgage is on my credit file and is recorded as satisfied as with my bank acconts and my only 1 ongoing debt my monthly phone contract.

 

[SQ_W211]

Hi Amo Rahl sounds a great idea spending and collecting air miles but again if I applied for the BA Amex card would I get accepted in my situation with seemingly no credit score!


There is no harm in trying as they may sign you up for lower credit limit. Amex usually give you result same time so as i said no harm in trying. go for the normal BA AMEX as there is no anual charge for this card otherwise they charge £300 or so per annum

 

[Quick Silver]

The flaw in the above is that everyone had to start somewhere without having previously had credit.

So my question is how do you get credit for the first time?

Experian and similar companies have an online facility to ask questions.

Ask how to get credit for the first time.

I am surprised that your mortgage was not on your credit file,

Credit files have your records going back over six years, and you might like to get your file copies from both Experian and Equifax for a cost of just two pounds each and will arrive in approx 5 working days.

Everyone should do this at least once per year as there can be bad stuff on your records due to mistakes and house moves etc etc.

The more times you apply for credit and it is refused has a negative effect as well , as each credit reference check is logged and would be seen as sign of desperation especially if you have recorded several credit reference checks against you over a short period of time . The best way is to keep your money in the bank use a credit card to purchase everything you need , then pay it off every month in full. It would take at least 6 months to build your credibility to an acceptable score and then that would be for only a very small loan .You really need a period of around 3 years good credit scoring without any defaults to obtain any substantial loans.

 

[stuartmac]

Hi,

Daft thing with this 'credit scoring' nonsense is I, who's been paying just the minimum on two (small) credit card debts by direct debit for a few months, have just had my credit limits increased to the point that I could probably buy a brand-new 'A'-class!

Duh!

Regards,

 

[Seeker_UK]

The more times you apply for credit and it is refused has a negative effect as well , as each credit reference check is logged and would be seen as sign of desperation especially if you have recorded several credit reference checks against you over a short period of time.

This also applies if you go through the application process and then cancel the process yourself.