# Does living in an overdraft affect credit rating?



## François (14 Nov 2008)

I applied for a loan of €8000 over 30 months recently which I was approved for. I cancelled the application and applied for a loan of €10,000 over 36 months three weeks later, which I was refused for. I can't really fathom why.

I earn approx €1000 net each week. I have €45,000 in savings. A car with no finance owing on it worth €15 - 20,000. 

I owe €3000 on my credit card which will be cleared when the 0% interest offer expires in March. I have a small outstanding loan with less than €1500 to be paid.

I stated all of this information on the application form.


The only reason I can think of being refused would be because I transfer €500 to my Northern Rock savings account as soon as my wages enter my account. I pay some money into my credit card and leave enough money to cover direct debits then I withdraw whatever is remaining to cover me for the rest of the week for food, diesel and socialising. Essentially within 24 hours of my wages entering  there is rarely more than €50 left in the account for the rest of the week. 

More often than not I may have to buy something at work each week, which I will put on my laser card because I have a 0% interest overdraft up to €1500. I am fully reimbursed for what I spend the following pay day, but on the weeks I do this I could be anywhere from €50 to €1000 overdrawn until I am paid the next week. The overdraft is always cleared within the week. Is this the most likely cause of being turned down for the loan?

Another issue is I stated my net weekly wage as being €1000 but most weeks I get paid over €2000 which is the money I spent during work being paid back along with my wages. From examining my bank statement would the bank class this vast difference between stated income and actual income as a lie I told on the application form thus voiding the application?


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## extopia (14 Nov 2008)

I doubt if the bank would penalise you for apparently earning more money than you said you did! A far more likely reason you were turned down is because the banks have less money to lend at the moment.


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## mercman (14 Nov 2008)

Francois, have you considered moving Banks ?? You seem like a model customer. Try somewhere else before they do your head in.


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## darrenhoss (14 Nov 2008)

i have no loans or credit cards, have €8,000 savings and earn aprox €1000 net per week. after my rent and bills are paid i have €2700 spending money each month to do what i like with. thats aprox €650 per week for me to do what ever i like with. i do also live in overdraft some weeks and have a limit of €1800.
i recently applied for a 20k car loan with repayments of €450 per month. i was declined within 5 minutes and told I did not have the capacity to repay it.
If i did get the loan i would have €2250 spending money after repayments.again thats around €500 per week. can anyone tell me how i do not have the capacity to repay it?
i have also re payed all my previous loans in full and on time 
was it possible the bank did not have the capacity to give me the loan????!!!!


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## rmelly (14 Nov 2008)

darrenhoss said:


> i have no loans or credit cards, have €8,000 savings and earn aprox €1000 net per week. after my rent and bills are paid i have €2700 spending money each month to do what i like with. thats aprox €650 per week for me to do what ever i like with. i do also live in overdraft some weeks and have a limit of €1800.
> i recently applied for a 20k car loan with repayments of €450 per month. i was declined within 5 minutes and told I did not have the capacity to repay it.
> If i did get the loan i would have €2250 spending money after repayments.again thats around €500 per week. can anyone tell me how i do not have the capacity to repay it?
> i have also re payed all my previous loans in full and on time
> was it possible the bank did not have the capacity to give me the loan????!!!!


 
How much of the '€2700 spending money' do you save? If you're spending it all, then they are correct - you don't have the capacity to repay unless you make significant changes to your existing spending patterns. Otherwise where will the €450 coming from? Do you currently have a car? If not, what about insurance, tax, petrol etc - will you be saving on other transport costs? If not that's another €100 a month on top of the €450.


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## darrenhoss (15 Nov 2008)

i do currently have a car and as i said after all my bills including tax and insurance i have 2700 'disposable income'. also, i have saved the 8000 in  9 months. i recently had loans to the value of 450 per month and repaid them no problem. these 2 loans were with the same bank as the loan i had applied for. to suggest i didnt have the 'capacity' to repay the loan is a bit unfair. anyway the car i have is fine and life goes on. probably a blessing in disguise!


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