My daughter, a final year college student, asked me to vouch for an increase in her overdraft. 500 € to € 1,000 to enable him to take driving lessons. AIB had asked for a guarantor.
I got a call today from the bank. I wouldn’t! I had a Visa card withdrawn from them in 2003, revoked in 2005 and reimbursed in full with the account I closed in 2006!
Yet over 10 years later they recorded me with a poor rating! A6 or an 8 I think. Now my Irish credit rating is good, no problem, but I got a life sentence from AIB. At the time, in 2005, AIB told me that it was only a 5-year ban!
You know that with good behavior you can get by after nine years with a life sentence for murder. With AIB, you are made for life. For how much have we, the taxpayer’s fools, bailed them out again?
I am tempted to say that this shows that you should never trust a bank. In fact, you should never trust a bank. Your relationship with them is based on a contract. They offer certain services – such as paying interest on savings and offering loans and overdrafts – and you agree to repay any loans in accordance with the terms of the loan agreement.
In this case, it looks like you had some issues with your Visa account over ten years ago. And they were clearly serious enough that the bank would revoke your card. In 2005, before the crash, the banks happily pushed credit to all comers: turning off the tap and taking back your card would have been quite drastic at the time.
Either way, you’ve settled your affairs, paid off the bank in full (which many people caught up in the crash afterwards will never be able to do), and moved on.
What is not clear from your letter is whether, after you have paid off your debt, you continued to do business with AIB or chose to do business elsewhere.
If you have been elsewhere, AIB may not have first-hand experience of your subsequent ability to handle banking affairs – although obviously, like any other lender, they have recourse to the credit bureau where they are. should be able to make sure that you are in good financial health. character for at least the past five years.
If you’ve been banking with them since the Visa card episode, and have had a clean banking “record” in the past decade, the issue is a bit more of a concern.
The bank told you that you would be “banned” for five years. I guess that meant they had no interest in even considering a loan application from you during that time. Of course, this does not mean that they are obligated to give you a loan afterwards, only that they will consider an application.
However, if they now do indeed say that you can apply but our internal rating on you is so low, you are unlikely to even be considered guarantor of a € 1,000 overdraft, then you must clearly consider your position.
While the credit bureau is a repository of credit history information, there is nothing forcing lenders to ignore any other information they may have about repayment capacity, and there shouldn’t be any. But, equally, a balanced examination of such a claim would presuppose a fair assessment of actual solvency.
You should write to the bank, especially if you are still using them, to ask for an explanation and advice on any future relationship, as this has clearly been unexpected and embarrassing in front of your daughter.
If that doesn’t work, your best course of action might be to follow the bank’s lead … and take your business elsewhere.
Please send questions to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email firstname.lastname@example.org. This column is a reading service and is not intended to replace professional advice.