Understanding Our Loan Assessment

As a responsible lender, it’s important we only lend what a member can afford.

We consider each loan application carefully. As part of the loan assessment, we use a licensed Credit Reference Agency, Equifax, and follow current credit union policies regarding your income, expenditure, disposable income, spending habits and lending history.

Our loans team look at your income and expenditure to see how much disposable income you have available (what’s left over after you’ve paid your essential living expenses) and can therefore afford to repay each week/month.

With your consent, we use Open Banking to review your income and expenditure, speeding up the assessment process and saving you time. If we cannot use Open Banking, you will need to supply us with copies of your last 3 months bank statements, before we can consider your application.

Remember, we are lending money that is members’ savings, and it would be irresponsible to lend to those who are unable to repay.

Credit Reference Agency

As part of our loan assessment, we use a licensed Credit Reference Agency, Equifax, to view your credit report. This gives us a summary of your lending history and helps to indicate what kind of borrower you are, and how likely it is that you will manage your repayments.

The credit report includes a check of your name and addresses for the last 3 years – as with all financial institutions we must verify this as part of the search. If we can’t do this – perhaps you’ve have moved home or changed your name and not updated your details – we will need a recent, official proof of address, like a bank statement or utility bill before a new application can be considered.

You can view your credit report free of charge here. For more information on credit reports and managing your credit score including checking for errors click here.

Why can’t I re-apply straight away?

Any credit applications you make – successful or not – will show up on your credit report, and several applications in a short period may look as if you are desperate for money. This might damage your credit rating further and also affects whether you can get credit, the interest rate you might be charged and how much you can borrow. For these reasons, we ask you to wait a number of months before re-applying.

Why do I have restrictions on my Penny Post loan?

Our loans policy includes some restrictions to help protect our members.

Members must have repaid at least 10% of the original loan value (or 25% for Gold & Platinum loans above £10,000) before applying to top up their loan. It is important you are comfortable with your repayments and do not overstretch yourself, financially.

You are able to make extra repayments or pay off a loan early without incurring penalties. However, if you are applying to top up a loan, lump sum repayments do not qualify, unless you can prove the sum has been built up through regular savings.

My loan application was declined – what can I do?

It can be disappointing if your loan application is declined, but there are steps you can take to understand why.

County Court Judgements (CCJs)

A County Court Judgment is a type of court order in England, Wales and Northern Ireland that a creditor can apply to have registered against you if you fail to repay money you owe. A CCJ shows on your credit report and can negatively affect your ability to get credit for up to six years.

Unlike some lenders, we do consider lending to members with satisfied CCJs or with low value active CCJs which are being repaid. In such cases, our Loans Team would consider any CCJs as part of the loan assessment and make a decision on an individual basis.

If CCJs are subsequently removed from your record, or if you can provide us with a letter of satisfaction, we would be willing to reassess an application from you.

For more advice on CCJs, click here.

Individual Voluntary Arrangement (IVA), Bankruptcy Order or Trust Deed

Our current lending policy does not permit lending to any member who has an active Individual Voluntary Arrangement, Bankruptcy Order or Trust Deed (in Scotland only) recorded against them.

If you have a Penny Post loan and are struggling with repayments, talk to us before considering any of these options. We may be able to help you, and prevent you from incurring fees charged by an Insolvency Practitioner.

An IVA or Bankruptcy Order will stay on your credit report for 6 years or until you are discharged if it takes longer, and will considerably reduce your chances of getting credit.