I’m currently shopping for a loan. My initial intention was to go with Monzo until they changed the interest rate, and I knew of a slightly lower interest rate one with Hitatchi.
I applied with Hitatchi but when they ran the application it came back with a higher interest rate that advertised, and much higher than Monzo.
I have a good credit rating and a sound history. My ClearScore even suggests the only thing I need to do to improve my rating is get more credit. I have no recent changes, and I even had an existing loan with Hitatchi that I had paid back diligently, so was a bit miffed.
I was a bit frustrated as I’d now have a hard search on my credit file for a loan I wouldn’t accept. So now I’m weary of applying for other loans incase the same thing happens.
How do you shop around for a loan without running the risk of it coming back with an unacceptable rate and more hard searches?
Thanks for readin!
phildawson
(Sorry, I will have to escalate this.)
2
You’re not getting a loan just to try and get a higher score?
If you do need a loan I’d recommend Zopa which only soft checks, both to quote and when you proceed, and the rates are far better than Monzo and competitive.
Haha, no Phil I’m not - sorry I can see why you might have thought that haha.
What I meant by that comment was that I seem to be doing everything right so was a bit miffed by being offered a higher rate of interest.
I’ll check out Zopa, thanks!
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phildawson
(Sorry, I will have to escalate this.)
4
All lenders have their own criteria so the score you see doesn’t mean anything. Even if you have excellent you may not get what you expect, there’s no 100% way to know the exact rate, but more that you’ll most likely be accepted.
Monzo is lucky dip atm with limit/rate, and being overly cautious in who it lenders to.
If you haven’t already I’d suggest this too for checking Experian. The key thing is making sure the info they have on you is correct. Credit Karma being the other CRA.
Loans providers will show a representative example which is offered to at least 51% of customers. The rate offered will be personal to you, depending on your circumstances to that lender.
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phildawson
(Sorry, I will have to escalate this.)
6
And yeah I fully get this miffed feeling that the score should mean the best rates, it’s all down to the lender. Some lenders only use one CRA like Monzo uses TransUnion so it may not have all the info to make the correct assumptions. Generally all three have almost all the same info, it all depends on what you have applied for and who they report to and share data with.
Also, remember a lender will offer you a rate based on how much profit it feels it can extract from you without jeopardising your application, played off against what it needs to charge at any particular moment in its business cycle.
It’s much more complex than a high credit score = low interest rate equation.
As the post above proves, the myth of the Credit Reference Agency ‘score’ is a paradox, because lenders can’t see that number, and the CRA doesn’t know a bank’s criteria for lending.
Monzo uses a mix of that plus your account history with them. So if you hardly use your Monzo account, the rate is expected to be higher / lower limits.
