Declined and a bit worried :(

Hi there,
Total newbie here, i'm the first one to admit i'm a little naive when it comes to finances so i hope you don't mind my request for help.

I have been working for the same company for the last 3.5 years, I earn between 35 and 40k a year before tax, and I bought my first house just over a year ago. I've had loans in the past (aib personal loan for 3000 paid off in full half way through) and I financed my car (8k, about 4k left on that, paying off over 2 years, one year left). Aside from that the only thing i have is my credit card, which is about 6k that built up on furnishing the house, which i was looking to clear using a personal loan.

Gave BOI all my details and they declined me today, which i am worried is going to adversley affect my credit rating. Is this the case? I know that in the UK if a bank decline you it makes things worse by adding another black mark, is it the same here?

I've applied for the same amount from gemoney.ie today so i'm waiting to hear from them, but have i got anything to worry about credit-scoring wise? I've never missed a loan or mortgage payment, maybe the odd 2 weeks late on an ESB bill that's all.

Help would be appreciated,

t

Did you tell BOI that the loan was for paying off a credit card? Because in my experience, other banks have declined me when I told them that's what the money was for. When I tell them it's for home improvement etc instead, the banks are a lot more willing to hand out the cash...

You don't mention how much your monthly mortgage repayment is. It could be that BoI simply reckons you're 'overstretched', relative to your earnings. I don't think that being declined for a personal loan adversely affects your credit rating, though I'm open to correction on that count...

AFAIK the banks won't give you a loan to pay off credit card debt.

I've gotten loans to clear credit card debt before (was consolidating it with a small amount left on another loan, didn't chop up credit card and ended up doing the same thing but needing a much bigger loan a couple of years later). In my experience I was only refused once when they had made a mistake on my application and didn't put down that with part of the loan I was going to clear the credit card. This seems to have led the bank to believe that I couldn't manage payments as I'd be paying back credit card and loan. All loans and credit card were BoI.

Kiddo, strictly speaking this isn't true. They'll grant you another credit card that you can transfer the balance to..........this is effectively a loan. Most are now offering 6-9 months at 0% before hiking it back up to the 14-17% rates.
thomj42, this may be worth looking at. If you could get a 0% for 9 months (Ulster Bank) and pay 300 off per month, that's 2,700 off your 6,000. You'll then be looking at clearing 3,300 in 9 months time. Might be easier to get a loan then to pay it off or you might be able to do it yourself by then.

thanks for the advice- i thought about the 0% credit card option, but i figured it was easier to get approved for a personal loan than another credit card... obviously not
anybody know definitively whether me being declined will affect my credit rating? i will try to get a copy of my report but i'm sure that takes a while to show up.

DrMoriarty- My mortgage payment is only just over 700 a month, and my girlfriend pays half that (i mentioned rental income of 4000 a year to BOI)

Maybe they didn't like the consolidation thing on my application- on my new application I said it was to cover home improvements (which is true technically as thats where the card money went)

Ulster Bank offer 0% on balance transfers and purchases (which you shouldn't be making for the next 9 months I guess) for 9 months on their 'Zinc' card.

Can you afford to repay the €6000 over 9 months? If you can't, the balance transfer may not be a good idea, as if you fail to clear the balance at the end of the 9 month period, you may be liable for interest on the entire amount for the 9 month period.

It's no use hearing it now, but just to point out for the benefit of others, better to get the loan before furnishing the house (or use savings, if any), as thomj42's story illustrates the dangers of running up credit card balances.

Agree with bb12
They are making nice money on your credit card bill and its not their interest that you pay it off.
Say the loan is for a new Kitchen for example and then clear the card .

D

Thanks again all, just got a call from gemoney.ie, they approved me for the 6k at 9.3 over 5 years which I think i'm going to accept all things considered.
I agree with you CCOVICH about the furnishing- it was poor budgeting on my part and I won't make the same mistake again.
assuming i accept the loan i will now have a loan payment of 120 quid a month which is hardly crippling, a clean credit card and the opportunity to save a bit more each month as a result- obviously the important thing is that i leave the credit card alone from now on
Any ideas on the credit rating question?

Theo said:

Kiddo, strictly speaking this isn't true. They'll grant you another credit card that you can transfer the balance to..........this is effectively a loan. Most are now offering 6-9 months at 0% before hiking it back up to the 14-17% rates.

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A few years ago I applied to AIB for a personal loan to clear my AIB credit card and was refused. When I queried the reason, I was told they don't give personal loans to pay off credit card debt....but then this was pre celtic tiger before banks threw money at anyone and everyone

Hi

I was recently declined a home improvements loan from Bank of Ireland - they told me it was because I was overstretched!!!

I pay €850 a month in mortgage payments, and spend about €500 a month on my VISA - I pay back 70% every month.
I earn €43,000 before tax.

I was very peeved at being refused!!!!

If you are unable to service your credit card debt on a monthly basis, how do you reckon you would be able to pay off a home improvement loan?

If the bank feel that you are overstretched, don't you think they may have a point? It's not like the banks in this country to trun down business unless they have a good reason.

If you are looking to improve/renovate your home, is remortgaging an option?

I would probably be able to service it if I tried...but most of my friends pay only the minimum so I figure that I am doing alright at 70%.

Maxed my SSIA contributions last year so I might wait and do the home improvements next year. Would never remortgage

Noor77 said:

I would probably be able to service it if I tried...but most of my friends pay only the minimum so I figure that I am doing alright at 70%.

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That's not a great rule of thumb-unless you pay 100%, you are liable for interest on the full amount outstanding for the month.

thomj42 said:

Any ideas on the credit rating question?

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Institutions do not record whether they approved or declined you on ICB, only the fact that they have accessed your records, so there will be no black mark on your file. Only time they would raise an eyebrow if there were a number of enquiries on your record over a short period of time - ie being refused by a number of banks and applying to another one each time.

Noor77 said:

spend about €500 a month on my VISA - I pay back 70% every month.

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This is a crazy cashflow management strategy. You will never clear your CC debt if you continue to do this! Saving (possibly even through an SSIA) while carrying high cost CC debt simply does not make sense. I'm sure that you and others have been told that here many times so I don't understand why you don't accept this and act on the advice given.