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Credit limit reduced or card closed??? This is why (maybe)
UK007BullDog
Posts: 2,607
Forumite
in Credit cards
People state that even with a good credit record and always paying on time their cards got closed or their credit limit reduced.
The banks talk about risky customers.
My thoughts on this is.......
Due to many people having a number of credit cards which they could in effect max out, they are a risk to the banks and also to themselves. The banks cannot see who is in risk of maxing them out due to financial emergencies or if someone is quite level headed about it. So all they look at is the amount of credit available, per the credit file, to the income a person gets.
So if you get stopped in your tracks by the banks I suggest you look at your credit files or your credit card statements and write down how many credit cards you have "active" and what is owned on them and what the limit is.
By active I mean cards which are still listed as active on your credit file but you might no longer have them in your wallet or purse, you might have cut them up and placed in the trash years ago but the account is still there and could be activated right away.
Any of the cards you no longer want to use, you cancel in writing and ask from them a letter in return to advise you of the closure and settlement. Then in a few months time check your credit file to see if they have closed/settled them on your credit file.
It makes much more sense to have 2 or 3 good cards with a high limit than to have half a dozen or more with small limits where one could not even book a cheap holiday.
Our experience has been that once we culled our active but not used credit cards that the other cards were fighting for our business by offering new 0% deals and increased our limits. However this was before the credit crunch.
Having just applied for a new 0% card and given more than I need I think that Martins theory by getting rid of old cards must be good for the credit file and being able to get new credit, when the credit checks are done. Our overdraft was increased as well without having to ask for it.
I was just wondering how others see this and if they have had similar experiences?
The banks talk about risky customers.
My thoughts on this is.......
Due to many people having a number of credit cards which they could in effect max out, they are a risk to the banks and also to themselves. The banks cannot see who is in risk of maxing them out due to financial emergencies or if someone is quite level headed about it. So all they look at is the amount of credit available, per the credit file, to the income a person gets.
So if you get stopped in your tracks by the banks I suggest you look at your credit files or your credit card statements and write down how many credit cards you have "active" and what is owned on them and what the limit is.
By active I mean cards which are still listed as active on your credit file but you might no longer have them in your wallet or purse, you might have cut them up and placed in the trash years ago but the account is still there and could be activated right away.
Any of the cards you no longer want to use, you cancel in writing and ask from them a letter in return to advise you of the closure and settlement. Then in a few months time check your credit file to see if they have closed/settled them on your credit file.
It makes much more sense to have 2 or 3 good cards with a high limit than to have half a dozen or more with small limits where one could not even book a cheap holiday.
Our experience has been that once we culled our active but not used credit cards that the other cards were fighting for our business by offering new 0% deals and increased our limits. However this was before the credit crunch.
Having just applied for a new 0% card and given more than I need I think that Martins theory by getting rid of old cards must be good for the credit file and being able to get new credit, when the credit checks are done. Our overdraft was increased as well without having to ask for it.
I was just wondering how others see this and if they have had similar experiences?
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Comments
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This is one reason, course the other is that if you pay up every month your costing the company money not making them money................0
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^except for the merchant fees everytime you use itYes Your Dukeiness
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that is correct, however I was more looking at the risk of maxing out all cards0
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I can perhaps see the logic of this, because a friend of mine (and feel free to berate me for straying into hearsay) is Ghanaian. She said that some people that she knows have been offered four or five cards within 6 months of gaining admittance to the country. After a year or so their credit was raised, and then they withdrew all that money via cashpoints and retailers, before leaving the country.
For me, this is entirely the banks' own fault by looking to lend too often to people who cannot make the repayments or who don't have the lending history to justify such loans. However, I think we all know who will get slammed by it eventually, and that's the long term customers.DFW - DEBT FREEEEEE!
Total - 10762/10762
Every silver lining has its cloud.0 -
you may have a point in some cases but certainly not all. I am one of those annoying pay it all off every month customers who got their card cancelled/closed. Yes i only ever used a maximum of 10% of my credit limit but it was my only card. only other things on my credit record as per experian is mortgage, orange mobile and virgin media tv/internet subscription. all up to date all pre dating my card which hads been opened near 2 years.
Ironically Experian has no trace of any recent credit searches either so I can only presume I personally was singled out because my account must cost egg more to opperate than the get from merchant fees on a spend of less than £300 a month.
Husband is the same except he doesn't have virgin media on his record.PPI Reclaim started 13 Feb 08RBS ??WFS 2004 ??WFS 2003 ??0 -
With cases like yours 'help'.....it really is indefensible, unless there is some phantom credit boogieman throwing a spanner in on searches about you. I've no doubt that as well as ditching those who look as though they're a credit risk they're also ditching those who make no profit whatsoever for them. My Dad is exactly the same and as careful with his CC, paying the balance each month. I just wish I had his sense.DFW - DEBT FREEEEEE!
Total - 10762/10762
Every silver lining has its cloud.0 -
Following on from the OP is it worth reducing limits of current credit commitments? For example I have a Next Directory account with a £3600 limit, the most I've ever had on it is about £300. Will lowering it to say £500 make me less of a risk in the eyes of potential lenders?0
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Following on from the OP is it worth reducing limits of current credit commitments? For example I have a Next Directory account with a £3600 limit, the most I've ever had on it is about £300. Will lowering it to say £500 make me less of a risk in the eyes of potential lenders?
Just been looking into the same thing on a few posts on the Stoozing board. I would have said yes, and cancelling any unused cards also a good idea.
YorkshireBoy came up with a good point that reducing your credit limit too low will actually make your card look maxed out which can count against you.
Lowering it to £ 500 if you've got a low balance on it sounds like a good idea to me. But don't Next charge about 33% interest? I'd be tempted to cancel the card completely and apply for a new card with a better rate, or 0% on purchases for 12 months and avoid any interest at all."A child of five could understand this. Fetch me a child of five." - Groucho Marx0 -
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The former.What is worse % used of available credit, or the total amount of credit available?
The stoozing site published an article on this very subject....
http://www.stoozing.com/g_score6.htm0
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