Low Rates Mean Tough Credit Scoring

Friday, 21. November 2008

Times are getting tougher, I don’t need to tell you that but if you are considering changing your car you need to consider who is going to supply your finance if you are going to use someone off the internet. One of the latest problems faced by applicants is the tightening of underwriting by lenders. Missing a couple of credit card payments, something that would have been ignored by lenders a year ago, is enough for some lenders running short of money to turn their back on you. And if you think about it those that offer very cheap rates are working on such fine margins that they will only take clients that fall within the top 10% of credit scores so even those with good credit are being declined. Sadly this is worse than it seems as this means that you will have to be proposed for finance elsewhere. The new funder, seeing a recent search by a leasing company, now wonders why you have apparently been declined elsewhere and looks more closely at your application and could even reject it out of hand. Then on to the next, each time the position gets worse. Even worse is the broker who is now desperate and uses a scatter gun approach. Again, having cut his margins finely also he now has to complete more business so he tries to place every application by sending your proposal to up to seven or eight lenders. As soon as the searches appear on the system you get declined automatically by the lenders unless you were lucky enough to be accepted by the first to carry out a search. I have often had applicants who have rejected my finance because it was a little higher than the company on the internet only to be declined on finance by a funder that I know would have accepted them had they come to us in the first place. Unfortunately you don’t get a second chance. So be very wary who you use to fund your next car. By Graham Hill