Generally when a lender is looking at lending funds to someone they check the following:
how many late payments (will they get there money on time)
any history of bad debt like ccjs
often forgotten how much lending someone already has elsewhere. Is the person over indebted. Can they honestly afford the lending.
income and expenditure
committed expenditure such as mortgages that aren’t going anywhere in the next 10 years.
I have worked in loans before for different lenders and they generally give similar answers. Sadly banks can’t always be really transparent.
Based on how new Monzo is to the lending game I can assume that they are going to be fairly risk adverse whilst they build there loan book. It’s like most banks when they start dealing with loans. Once they have a reasonable book in play and it’s profitable then it’s likely they would start looking at riskier loans.
And before I get comments saying not fair or my credit score is perfect. Everyone circumstances is different. Yes one bank might say no but others may say yes and you can shop around for loans through the likes of Credit Karma, Equifax, etc.
Im hopeing this gives some people a little insite to what’s probably going on behind the scenes currently and some of criteria banks might be looking at.
2 Likes
phildawson
(Sorry, I will have to escalate this.)
62
I was curious in seeing what I could get if I actually needed one. Full time, homeowner with mortgage and £52,000 it’s giving me just a £3k limit.
Absolutely bananas APR, £805.67 for borrowing £3k over two years.
That’s a real shame. I mean why would I use this over Zopa where I could get £25k and decent APR.
If a loan is paid off early do you still need to pay the equivalent interest amount of the remaining months?
phildawson
(Sorry, I will have to escalate this.)
64
The payment in full is how much interest up to that specific day to settle it completely. You wouldn’t pay for the interest that you would have incurred if you left it to the end.
Not sure the credit checks are up to much.
I dont use Monzo as my main account yet. Joint accounts cant transfer in.
So my account doesnt have regular salary payments just large transfers in every now and then and lots of spending.
My annual income is £100k plus and credit rating is 999 (perfect) with Experian yet apparently I cant have an overdraft or a loan.
Somethings not working…
1 Like
phildawson
(Sorry, I will have to escalate this.)
67
Monzo only use TransUnion/credit karma rather than the key two Experian and Equifax which might be the reason.
I’m very similar to you then, savings in Monzo pots and investments in ISA’s and Share trading accounts but Monzo arent offering me any credit at all.
Not that I want or need it, it just bugs me.
I know its stupid buy it almost feels like an insult.
How can you compare a loan of £3k with a loan of £25k? The APR is a function of the amount borrowed and the maturity of the loan.
They have already said that the APR is around 3.7% for loans above £7.5k. If you need £3k, you are cash-strapped and the APR will be inevitably higher.
I have seen loans as low as £5,000 for a little over 2%
phildawson
(Sorry, I will have to escalate this.)
72
I’m comparing it both in the sense of how much they are lending, that Monzo will only give a max £3k and other banks or lenders like Zopa would give me £25k or more without fuss.
I’m also saying that 26.8% APR from Monzo on a £3k loan is nuts compared to other £3k loans from other providers again like Zopa that would give me 8% APR.
Well, experian isn’t a lender so the perfect CRA scores are meaningless, lenders don’t see the score, they see your credit file
2 Likes
phildawson
(Sorry, I will have to escalate this.)
74
Whilst the lender sees the report and makes their own assumptions, the score is still a good indication.
I think what we are seeing are people who have decent credit reports and can get decent loans elsewhere being offered either no or very low loans through Monzo.
Monzo don’t seem to have got their algorithms correct. Let’s hope it improves
Pay my salary in. Got a savings account. Got an ISA. Got a £1000 overdraft that is barely touched
Not eligible for a loan
I am not particularly bothered personally as I have managed to move on from years of having heavily utilised credit, through events both good and less good, but the criteria maybe find me a bit too unexciting
As Monzo use TransUnion who have a maximum ‘credit score’ of 710.
Try looking there
From the Credit Karma website
The credit score available through Credit Karma is out of 710.
Your credit score reflects your history of borrowing and the likelihood of you making repayments should you borrow again. If you have a high score, you are usually seen as a lower risk and, consequently, you generally have a greater chance of being approved for credit.
However, it’s important to remember that lenders don’t make their decision solely off your score. In fact, when they review an application they consider loads of different things. This means that a high score doesn’t automatically lead to credit approval in all cases and vice versa with a low score.
