Have I reached my Credit Limit for BT'ing?

Grumpy_Old_Duffer · 20 June 2005 at 2:55PM

I have been applying for, and been accepted, for Credit Cards so that I can 'stooze' the funds into other Accounts. I've been applying for 1 or 2 cards per month depending on what deals were around at the time. Total 'Stooze Pot' currently running at £50K+.

Last week applied for 'IF' and 'RBS', only to be rejected on both, having received the "... as responsible lenders...", ".....credit you are currently committed to..." letter.

Now my thoughts on this is that when I applied for these Cards I stated that I wanted to Balance Transfer debt from 2 Cards I currently 'stooze' on, £18k on CapitalOne & £8k on Halifax, and this was shown on BOTH applications. Because my salary is £31k, I'm wondering if I would have been accepted if I stated that I wanted to Balance Transfer lower amounts i.e. £5k from 2 other Cards I have?

If I had used these 2 other Cards and showed I wanted to BT £10K, on BOTH applications, I wonder if I would have been accepted?

Any 'Insider' or 'Expert' have an opinion on how much you should declare that you want to BT when applying for Cards? Does there tend to be a BT limit at which applications are automatically accepted i.e. say £7.5k, and anything over this amount is looked into in more detail?

YorkshireBoy · 20 June 2005 at 3:17PM

It's probably a debt/income ratio problem and therefore a case of "computer says no" - I've had one of these rejections myself.

I wrote a letter, including supporting material, and asked for it to be considered by their manual underwriting team. Result was acceptance at a limit equalling my highest other card.

I've probably reached my peak for a while now as Mrs YB and myself have managed to stooze £73K in 9 weeks on 8 cards!!!!

Reaper · 20 June 2005 at 4:52PM

I agree. I don't think the automatic acceptance criteria are bright enough to take into account any stated balance transfer. Besides you might change you mind about the BT leaving you over-debted (from their point of view).

The computer will just look at your total actual debt, and available credit, compared to your income (and credit rating of course).

As YorkshireBoy says an apeal for a human to look at the data might work, but it sounds as though you have hit your ceiling and should stop applying for cards. You will have a problem rotating the debt onto new cards in the future, which is why it is often not a good idea to get every stooze penny you can, but sit a little below your maximum. For that reason I would not even apeal it.

Towen_2 · 20 June 2005 at 6:52PM

Hi All,

This is my first post so go easy on me!

Experian have for the past 2 year had a measure call the Consumer Indebtedness Index (CII). Before this, all the looked at was how likely you were to default in the next 12-18 months. Now they also consider if you are or will struggle to meet you current commitments now or in the near future (again 12-18 moths). This measure is part of their latest generic bureau score (call Delphi 7) and can be seen stand alone by financial service providers. Recently, a number of the big players have moved to 7 and now automatically have indebtedness build into their credit scoring systems.

See here for a new article http://www.yourmoney.com/loans/credit_agency_responds_to_debt_crisis/

This is one reason my Zopa quote limit utilization should be below 80% to avoid negatively impacting your credit score (although they use Equifax who has similarly upgraded their models and scores).

CII does not take into account your income directly, but estimates it from the data held by Experian, e.g. where you live, your age, years at bank etc. Then it looks at you current commitments (mortgages, limit cards loans) and works out how much disposable income you have.

All pretty boring stuff I know, but I thought you might be interested in how this stuff works, and why some providers may have change their decisions in the last 6 months.

Reaper · 20 June 2005 at 8:25PM

Thanks, I always like to know as much as possible about how they credit score. However do you know how widely it is used? I know many companies prefer to take the raw data from Experian and make their own decisions as to a person's credit worthiness.

Towen_2 · 20 June 2005 at 10:17PM

Your are right, most companies prefer this as it give better results, but both CII and Delphi 7 are pretty powerful and are provided as part of the raw data your refer to.

Most companies that are using DPA 3 party compliant systems will have moved to the upgrade bureau data files and so will be using it in their decisions. The rest will be moving to the new data files soon or later as the data commissioner set a deadline of October 2004 to meet compliance so they are already on borrowed time!

nrsql · 21 June 2005 at 12:45AM

Dang, looks like I'm not doing this right.
Did Morgan Stanley in Nov, Egg Dec then transferred them both to Virgin last month at £25k. (Did egg for another month as it had time left). Have a capital one nine month application which expires in sep - was planning to wait until end Aug before applying for that,
Sounds like I should be speeding things up a bit and hitting a few more cards.

Grumpy_Old_Duffer · 21 June 2005 at 8:14AM

Towen,

First post, eeh! Well, it was most informative, just what MSE is all about.

I take it Delphi 7 was introduced because of the growing National media publicity about people getting themselves into unmanageable debt?

It would appear that the Credit/Income ratio must be in the region of 1.6.
Anyone exceeding that ratio?

YorkshireBoy · 21 June 2005 at 9:05AM

Grumpy_Old_Duffer wrote:

It would appear that the Credit/Income ratio must be in the region of 1.6.
Anyone exceeding that ratio?

My stoozing ratio is 1.9 and available credit is 2.3

Reaper · 21 June 2005 at 10:53AM

Mine is also very high, but only through tricks such as going for credit cards which do not report to the CRAs or carefully picking those which only report/query with Equifax or Experian alone.

tonymac_3 · 21 June 2005 at 11:20AM

I am intrigued by this discussion. We have generally been advised that we should try to avoid making multiple or too many applications in a short period. From what is being said here then it is the debt/income ratio that is all important. I am thinking of making two more applications, having got Virgin and IF in May. How long should I wait? I am thinking of M&S and Nat West, doing both applications at the same time. Any thoughts or advice. How long should I wait? Current debt/income ratio on cards is about 0.5.

Have I reached my Credit Limit for BT'ing?

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