Personal loans and credit scores (HSBC poor experience)
Discussion
I was just playing around on my online banking to see if I could get a £15k loan, which was approved at 3.9% APR
but i wanted to change it to £8k instead, so rang up and said they can't change it and has to be done on a separate application, which the HSBC telephone advisor reset so I could start a fresh
i didn't realise each time i applied it would affect my credit scoring and now the £8k is coming back at 3.9% declined but they've ramped it up to 9.9%!
I tried to call in to question this which one advisor said they've managed to get the lending team to change, but it hasn't!
4 calls and still not sorted
how long does credit check scores adverse stay with you when just getting to application stage?
but i wanted to change it to £8k instead, so rang up and said they can't change it and has to be done on a separate application, which the HSBC telephone advisor reset so I could start a fresh
i didn't realise each time i applied it would affect my credit scoring and now the £8k is coming back at 3.9% declined but they've ramped it up to 9.9%!
I tried to call in to question this which one advisor said they've managed to get the lending team to change, but it hasn't!
4 calls and still not sorted
how long does credit check scores adverse stay with you when just getting to application stage?
They stay on the searchable record for 12 months but have very little impact on a credit score after 6 months.
HSBC do have the ability to say they searched your record in error for the first loan, and therefore "wipe" it from your record, however, they would then be lying. Unfortunately it is not their fault you changed your mind on a loan and therefore I doubt they will access your credit score to wipe it.
I would not say this is a poor experience from HSBC but an unfortunate lesson in how credit scoring works. Whilst, internally, HSBC should be able to see you never took out the first loan other lenders will not know this and for all they know that application could be getting processed, hence why it will now sit on your record for 6 months. Someone that constantly applies for credit looks like they are desperate for it (ie short of cash) and, as such, are seen as a much bigger risk.
On the other hand, lenders do charge higher interest rates on smaller loans so that it makes it worth their while in lending smaller amounts to you, is it possible that the higher interest rate on the 8k loan is to do with this rather than your earlier application?
Many lenders are very reluctant to tell people how they came to their decision of whether to lend, and at what interest rate, so it could be the above is true but they have been instructed not to say this so they don't have to then answer the question of "why are you charging me more to borrow less?"
HSBC do have the ability to say they searched your record in error for the first loan, and therefore "wipe" it from your record, however, they would then be lying. Unfortunately it is not their fault you changed your mind on a loan and therefore I doubt they will access your credit score to wipe it.
I would not say this is a poor experience from HSBC but an unfortunate lesson in how credit scoring works. Whilst, internally, HSBC should be able to see you never took out the first loan other lenders will not know this and for all they know that application could be getting processed, hence why it will now sit on your record for 6 months. Someone that constantly applies for credit looks like they are desperate for it (ie short of cash) and, as such, are seen as a much bigger risk.
On the other hand, lenders do charge higher interest rates on smaller loans so that it makes it worth their while in lending smaller amounts to you, is it possible that the higher interest rate on the 8k loan is to do with this rather than your earlier application?
Many lenders are very reluctant to tell people how they came to their decision of whether to lend, and at what interest rate, so it could be the above is true but they have been instructed not to say this so they don't have to then answer the question of "why are you charging me more to borrow less?"
Edited by ymwoods on Monday 1st September 22:08
Don't worry, I learnt the hard way a few years ago about how a bad credit score can affect you after many years of bouncing around an overdraft and credit card whilst at Uni. I just count myself lucky that once you grow up and sort out your debts its only 12 months before your fully trusted again! (IVA, CCJ's etc aside)
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