Personal loans and confusing criteria

[striper]

I have a general confusion about personal loans, their acceptance criteria, etc.

last April I applied for a personal loan with Avant.  I was accepted for $13,000 at a high interest rate, something over 20%

i was surprised that I was accepted as this was an unsecured personal loan and I had a very shaky credit report.

my scores were around 600.  I had very high credit util, about 96-100% for all of the them.

i have many derogatories including 1 charge off and another paid charge off.

Then in September I applied for another unsecured personal loan with Lending Club.  I was approved for 23,000 at an interest rate of 18%.

my credit was in the same condition.  I hadn't paid down my credit card balances, my scores were slightly higher, 600-670.

same credit card util, same derogatories plus I had the extra debt of that first personal loan.

so I took this loan, paid off the original loan, paid off all my credit cards, and my scores went up over the next few months.

my scores are now 650/706/726 eq/exp/tunas per MyFico.  Credit Karma lists them all as 740-750

now when I apply for a personal loan I either get rejected or get offered a tiny amount at high interest rates.

i want to refinance my Lending Club loan with this new one.

i don't get it.  My credit report and scores look much better.  I have had hard pulls expire as well.

i get it that maybe the personal loan debt is an issue, but everything else is much better.

im below 3% util on my credit cards.

no additional baddies.

ive tried about 6 different personal loan companies.  All were soft pulls with the exception of Sofi.  I got to the final stages of Sofi and then they take a hard pull.

every time I either get rejected or get offered a puny loan 1-6k at rates between 20-30%

either the criteria is tougher or there is some algorithm I don't understand.

it seems as though there are more personal loan offerings than ever.

On nearly all of them I got a prescreened invitation or some other offer.

[Appleman]

What is your DTI with your current credit profile?

Congrats on the better FICO scores.

[iced]

It's not clear from a credit report what your intention is with the PLOC. Because of that, I would venture to guess that banks are hesitant to loan you money when you already have a loan because it looks like you're in over your head by asking for two loans. They have no idea or guarantee you'll use the second loan to pay off the first.

[Revelate]

It'd be worth talking to someone like a CU rep in person about a possible refinance.

Personal loans are all over the map: both Avant and Lending Club will reach down into the subprime space.  Lending Club I suspect has been undergoing a loss of investors in that area lately (I know I'm unwinding mine and that's where I played, the defaults were getting too high and other investors have to be getting the same stats I am in those tranches).

Personal loans in the prime category, are the hardest thing to get UW bar none: it's only recently with P2P lending that it's even opened up at all but lots of major banks won't even do a personal loan as they're in a higher risk category at a return they weren't comfortable with.  You likely need someone you can play in the middle tier with, which would either be the P2P lending space again, or a CU where you can explain your story.

Also if you have been shotgunning apps out, you're not doing your credit files any favors... be prepared to explain that as a mistake of some sort (not understanding how credit worked blah blah blah, some mea culpa thingy that'll support your case) if you do talk to someone.

[striper]

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@Appleman wrote:

What is your DTI with your current credit profile?

Congrats on the better FICO scores.

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Im new to these terms so I will look up what calculates the DTI and get back to you.Thanks

[striper]

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@iced wrote:

It's not clear from a credit report what your intention is with the PLOC. Because of that, I would venture to guess that banks are hesitant to loan you money when you already have a loan because it looks like you're in over your head by asking for two loans. They have no idea or guarantee you'll use the second loan to pay off the first.

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THat was my fear as well.  I can totally understand that from a lender's point of view, adding an additional persoanl loan is risky.

I was going to mention that to the lender, but I suppose there is no guarantee that I will pay off the loan.

However, I did get approved for the 2nd personal loan while still caryin g the first.  The total amount was not super high and maybe it wasnt on the credit report at that time?

Who knows.

[striper]

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@Revelate wrote:

It'd be worth talking to someone like a CU rep in person about a possible refinance.

Personal loans are all over the map: both Avant and Lending Club will reach down into the subprime space.  Lending Club I suspect has been undergoing a loss of investors in that area lately (I know I'm unwinding mine and that's where I played, the defaults were getting too high and other investors have to be getting the same stats I am in those tranches).

Personal loans in the prime category, are the hardest thing to get UW bar none: it's only recently with P2P lending that it's even opened up at all but lots of major banks won't even do a personal loan as they're in a higher risk category at a return they weren't comfortable with.  You likely need someone you can play in the middle tier with, which would either be the P2P lending space again, or a CU where you can explain your story.

Also if you have been shotgunning apps out, you're not doing your credit files any favors... be prepared to explain that as a mistake of some sort (not understanding how credit worked blah blah blah, some mea culpa thingy that'll support your case) if you do talk to someone.

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That makes sense.  On the Sofi loan, I should have spoken to a representative and told them my intention was to pay off the existing personal loan.

Ive only had one hard pull, and that was for the final stage of the Sofi loan application. 

I do have a fear that soft pulls are in fact visible to other lenders.

[DaveInAZ]

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@striper wrote:

That makes sense.  On the Sofi loan, I should have spoken to a representative and told them my intention was to pay off the existing personal loan.

Ive only had one hard pull, and that was for the final stage of the Sofi loan application. 

I do have a fear that soft pulls are in fact visible to other lenders.

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If you speak with a rep of any of the personal loan companies I would think they can make a condition of approval of a new loan contingent on paying off the Lending Club loan, they payoff the LC loan directly before releasing the rest of the funds to you.

[striper]

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@DaveInAZ wrote:

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@striper wrote:

That makes sense.  On the Sofi loan, I should have spoken to a representative and told them my intention was to pay off the existing personal loan.

Ive only had one hard pull, and that was for the final stage of the Sofi loan application. 

I do have a fear that soft pulls are in fact visible to other lenders.

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If you speak with a rep of any of the personal loan companies I would think they can make a condition of approval of a new loan contingent on paying off the Lending Club loan, they payoff the LC loan directly before releasing the rest of the funds to you.

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That would be a good idea.

I think the lending companies are nervous about lending to people who already have personal loans.  It's probably a flag when people take out personal loans.

On at least one of the applications, they ask if you have taken out a personal loan in the last 3 months.

[Revelate]

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@striper wrote:

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@DaveInAZ wrote:

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@striper wrote:

That makes sense.  On the Sofi loan, I should have spoken to a representative and told them my intention was to pay off the existing personal loan.

Ive only had one hard pull, and that was for the final stage of the Sofi loan application. 

I do have a fear that soft pulls are in fact visible to other lenders.

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If you speak with a rep of any of the personal loan companies I would think they can make a condition of approval of a new loan contingent on paying off the Lending Club loan, they payoff the LC loan directly before releasing the rest of the funds to you.

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That would be a good idea.

I think the lending companies are nervous about lending to people who already have personal loans.  It's probably a flag when people take out personal loans.

On at least one of the applications, they ask if you have taken out a personal loan in the last 3 months.

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You may be right in general, but more likely the pink highlight is simply it can take up to 3 months for an account to be reported to the bureaus, so basically this is a check for loans that might not be reported yet which would change the underwriting assuredly as you state.