12 replies to this topic

[vikramrkin]

Hi All,

I came across zopa a month ago when I decided to try something outside the bank as I didnt like the rigid t&c of banks.

Before applying with zopa, checked my credit history with equifax and it all looked fine. No late payments, orrect address details, entry in electrol roll, no CCJ, no defaults, never missed payments ... basically nothing that I can think of which can go against my loan application.

Took couple of quotes on zopa and got one for 7.1 AER and decided to go ahead. After a week of waiting, I was disappointed to get a rejection email. Zopa were not very good at telling me why other than saying to have a look at equifax.

Can any one advise what might have gone against me? I had asked for a loan amount equivalent of 1/7th of my annual salary to buy a car. With my wife also working full time, it would have been really easy for me repay it. If I combine all my accounts, I actually have that amount, but wanted to keep some liquidity, hence decided for a loan.

Also, I have lived in UK for total of 4.5 years - if that affects my application in any way.

Thanks
Vik

Edited by vikramrkin, 04 July 2012 - 21:58.

[Deddington]

vikramrkin, on 04 July 2012 - 21:52, said:

Hi All,

I came across zopa a month ago when I decided to try something outside the bank as I didnt like the rigid t&c of banks.

Before applying with zopa, checked my credit history with equifax and it all looked fine. No late payments, orrect address details, entry in electrol roll, no CCJ, no defaults, never missed payments ... basically nothing that I can think of which can go against my loan application.

Took couple of quotes on zopa and got one for 7.1 AER and decided to go ahead. After a week of waiting, I was disappointed to get a rejection email. Zopa were not very good at telling me why other than saying to have a look at equifax.

Can any one advise what might have gone against me? I had asked for a loan amount equivalent of 1/7th of my annual salary to buy a car. With my wife also working full time, it would have been really easy for me repay it. If I combine all my accounts, I actually have that amount, but wanted to keep some liquidity, hence decided for a loan.

Also, I have lived in UK for total of 4.5 years - if that affects my application in any way.

Thanks
Vik

Hi and welcome to the forum.

Nobody other than Zopa is exactly sure what Zopa’s algorithm is for assessing loan applications, and they will not go into detail as it is a USP for them.

They are placing lenders money, every day folk like you and I suspect, and any default we lenders have to take on the chin, we would all do a runner if default rates were too high.

Hence they are very stringent in their assessment and as a result have achieved a default rate that the traditional lenders could only aspire to.

Along the way we get people who like you feel slighted and confused as to why they are rejected for their applications despite them feeling they are a good risk.

Please don’t take it personally most lenders here would rather Zopa erred on the side of caution even if it may occasionally turn away a sound investment of our money.

I am sure you will find other lenders less stringent.

Come back and lend when you have the spare cash.

[vikramrkin]

Deddington, on 04 July 2012 - 22:52, said:

Hi and welcome to the forum.

Nobody other than Zopa is exactly sure what Zopa’s algorithm is for assessing loan applications, and they will not go into detail as it is a USP for them.

They are placing lenders money, every day folk like you and I suspect, and any default we lenders have to take on the chin, we would all do a runner if default rates were too high.

Hence they are very stringent in their assessment and as a result have achieved a default rate that the traditional lenders could only aspire to.

Along the way we get people who like you feel slighted and confused as to why they are rejected for their applications despite them feeling they are a good risk.

Please don’t take it personally most lenders here would rather Zopa erred on the side of caution even if it may occasionally turn away a sound investment of our money.

I am sure you will find other lenders less stringent.

Come back and lend when you have the spare cash.

Thanks Deddington. Yes, I was really confused with zopa's decision. As you say, I should not take it personally I guess.

Would that have left a record on my credit file which other lenders could see? If I lend money on zopa, will that increase the chances of getting a loan from zopa in future or the two are completely different?

When I take a loan, I want to clear it off in 3-6 months time. Is there any other alternative to zopa? I tried banks, but none of them have much flexibility in repayment.

Thanks
Vikram

[figures18]

vikramrkin, on 05 July 2012 - 08:43, said:

<snip>

Yes there will be a record on your credit file as you made an application and Zopa will have had to carry out the necessary search.  No, lending on Zopa won't influence your (or anyone's) ability to get a loan at a future date.  If Zopa told you in their e mail to look at Equifax then I suggest you dig into it a bit more as that implies that something in the report wasn't what it needed to be. The other thing that can go against a borrower is length of time in current employment although that may not be relevant in your case.

[propman]

vikramrkin, on 05 July 2012 - 08:43, said:

Thanks Deddington. Yes, I was really confused with zopa's decision.

When I take a loan, I want to clear it off in 3-6 months time. Is there any other alternative to zopa? I tried banks, but none of them have much flexibility in repayment.

One other potential reason for a rejection is limited information. Perversely having borrowed money and paid it back is usually required, especially if you have not been in UK for a large part of your life. This is a case of having to assume the worst, so if you have had ample resources until now, it is possible that the requirement for a loan is that these have now run out and that you are living beyond your means. Unfortunately credit records do not give information on assets.

2 possible avenues. You could borrow from one of the many low rate credit card deals. You will probably have t pay a 4% or so up front fee, but should be interest free after that. You could try Ratesetter, the other P2P lender, although they are equally strict, quoting an 85%+ rejection rate and your credit rating will be impaired if you have 3 credit searches in 6 months.

Hope you find a suitable solution.

- PM

[sl75]

vikramrkin, on 04 July 2012 - 21:52, said:

Before applying with zopa, checked my credit history with equifax and it all looked fine.
[...]
Also, I have lived in UK for total of 4.5 years - if that affects my application in any way.

As well as the obvious implications, it'll mean you only have (at most) 4.5 years of credit history... and probably rather less than this if you didn't instantly have some credit facility the moment you arrived in the UK (although some bills e.g. phone/utilities/etc. get reported too, so you might have got *something* almost right away). For most borrowers, Zopa (and indeed any other lender who uses credit scoring techniques) will be analysing up to the last 6 years of credit history.


The main reason they tell you to check the equifax report after a decline is to see if there are any errors. If a previous creditor had provided incorrect information, or someone else had impersonated you in order to obtain credit in your name, they could, in principle, have been basing a decision on this, and would be obliged to review that decision when the information is corrected.

If "everything is fine" on the credit report, then this means that Zopa have based their decision on correct information, and you didn't simply meet their criteria this time. Most applicants don't so this isn't unusual.

[vikramrkin]

propman, on 05 July 2012 - 16:25, said:

2 possible avenues. You could borrow from one of the many low rate credit card deals. You will probably have t pay a 4% or so up front fee, but should be interest free after that. You could try Ratesetter, the other P2P lender, although they are equally strict, quoting an 85%+ rejection rate and your credit rating will be impaired if you have 3 credit searches in 6 months.

Hope you find a suitable solution.

- PM

Thanks, thats very useful information. I will give it a try. I never knew you could borrow money from credit card, I thought you could only purchase goods/services (I have two credit cards, which I use regularly and pay it off with in few days of spending).

Quote

If "everything is fine" on the credit report, then this means that Zopa have based their decision on correct information, and you didn't simply meet their criteria this time. Most applicants don't so this isn't unusual

Thanks S175. I dont understand why zopa or any other lender for that matter have to keep their decision making logic secret. For ex, If they have declined my application on the basis of my length of stay in UK, saying so wouldnt hurt them in any way. It will atleast give me some peace of mind as know why things were declined. Now I have look through my redit history very carefully if there is anything wrong. I guess I am new to taking loans and dont understand the details very well, hence all these questions.

[propman]

vikramrkin, on 05 July 2012 - 22:10, said:

... I will give it a try. I never knew you could borrow money from credit card, I thought you could only purchase goods/services (I have two credit cards, which I use regularly and pay it off with in few days of spending).

I suggest that you check that they have an interest free offer. Normally they charge interest from the day of the withdrawal and sometimes at a higher rate than on purchases, but their are usually a number offering interest free periods.

Glad to be of service.

- PM

[PoohBah]

vikramrkin, on 05 July 2012 - 22:10, said:

Thanks, thats very useful information. I will give it a try. I never knew you could borrow money from credit card, I thought you could only purchase goods/services

Borrowing money on a credit card has its place but can be extremely expensive, unless you can find a special deal.  Also, regularly getting cash advances can have a negative effect on your credit history, as it implies that you are living at the limit of your income.

Quote

Thanks S175. I dont understand why zopa or any other lender for that matter have to keep their decision making logic secret.

Because if their criteria are made known to everybody, the scrotes will know how best to manipulate the information on their fraudulent applications, and losses will go through the roof.  BTW it's SL75, not S175.

[Biscit]

I must add that I felt frustrated earlier in my life, my spotless operation of a graduate credit card and loan were not reported to Experian and equifax because I hadn't defaulted (perhaps cynically to keep me with my student bank). I got turned down for a credit card outside of my bank because I had no history.

I thought my spotless credit history was good- from a financial institutions perspective it was not good but non-existent.

[sl75]

vikramrkin, on 05 July 2012 - 22:10, said:

Thanks S175. I dont understand why zopa or any other lender for that matter have to keep their decision making logic secret. For ex, If they have declined my application on the basis of my length of stay in UK, saying so wouldnt hurt them in any way.

They use a technique called "credit scoring". This means that the application is not usually declined on the basis of any one specific piece of information, but on the overall combination of ALL of the information they have available.

If you look at https://uk.zopa.com/.../who-can-borrow this clearly states that you need a minimum of 3 years address history in the UK.

Based on this, if you'd applied 2 years ago, you'd have been declined on the basis of length of stay in the UK, without the need to go through the credit scoring process (and the website may well have done this automatically without bothering to trouble the human underwriting team).

Now, you are not being declined on the basis of length of stay in the UK - in principle, if other factors they take into consideration in calculating the credit score were good enough, someone who had been in the UK the same length of time could get a loan. It is likely, however, that being just 1.5 years over the absolute minimum, it is still a significant factor in keeping the scoring lower than what you might eventually achieve.


Rather than obsessing over the credit score, just make sure you demonstrate you can handle your finances, and build up a good reputation for living within your means and repaying any debts as they come due, and over time the credit score will follow.

[jago]

Ah, that's nothing!

I had:

- 31 years at the same address
- previously paid off a 5 year £15,000 loan 6months ago with Zopa with no errors
- was asking for £7k because it's at 6.6% for 3 years

A guy from Zopa called me up and asked me what it was for. I said a career development loan. He asked if this is for my current career and I said yes. I said I don't yet know if I'll have a definite use for it as it's possible work may be able to pay for it. He said thanks and I shortly got rejected.

I guess I will have to continue in my current position until I save up enough to pay for the course... at which point the industry market window may have closed... sigh...

Now I've trashed my chances of credit I would guess by applying and getting rejected. On the one hand we all want to know what's going on and on the other there's the obscurity argument that by hiding the critea we can stop people gaming the system. Unfortunately, security by obscurity is no security. All it takes is one pair of loose lips at Zopa or leaky data and the criteria is out. But nevermind, that's credit and debt for you, that's the industry and life as we know it.

[vikramrkin]

jago, on 10 July 2012 - 22:34, said:

Ah, that's nothing!

I had:

- 31 years at the same address
- previously paid off a 5 year £15,000 loan 6months ago with Zopa with no errors
- was asking for £7k because it's at 6.6% for 3 years

A guy from Zopa called me up and asked me what it was for. I said a career development loan. He asked if this is for my current career and I said yes. I said I don't yet know if I'll have a definite use for it as it's possible work may be able to pay for it. He said thanks and I shortly got rejected.

I guess I will have to continue in my current position until I save up enough to pay for the course... at which point the industry market window may have closed... sigh...

Now I've trashed my chances of credit I would guess by applying and getting rejected. On the one hand we all want to know what's going on and on the other there's the obscurity argument that by hiding the critea we can stop people gaming the system. Unfortunately, security by obscurity is no security. All it takes is one pair of loose lips at Zopa or leaky data and the criteria is out. But nevermind, that's credit and debt for you, that's the industry and life as we know it.

Thats some consolation for me

Couldnt agree more with what you have said on the criteria.