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Why does my bank do a credit check to LOWER my overdraft?
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# 1
Hollypop
Old 24-07-2009, 10:24 AM
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Angry Why does my bank do a credit check to LOWER my overdraft?

I have an £800 overdraft with NatWest. I have been a NatWest customer for over 3 years now and have good credit with them, however in the last year i got a CCJ for an old credit card from 2005. so now i have a CCJ on file so i cannot get credit anywhere. Which i can cope with, However i am trying to pay off my over draft as i find i use it up to the max every month.

I rang up NatWest and explained to the lady on the phone that i am trying to pay my over draft off a little each month so could they reduce it, say to £600 / £700 this month, then next month I'll reduce it again ect.
The lady on the phone told me that they have to do a credit check to do this, even though it is LOWER amount to what i currently have, So it would just fail and get rejected, then be another bad mark on my crediit file. So she told me the only way to do it would be to save up the £800 then ring up and cancel the overdraft.

I just dont understand why the bank has to do a credit check to lower the amount, i could understand if i wanted to up the limit then of course they would need to do a check. it just does not make sence to me.

can anyone shed any light on this for me?

Many thanks
Holly
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# 2
Paul_Herring
Old 24-07-2009, 12:59 PM
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Quote:
Why does my bank do a credit check to LOWER my overdraft?
To make sure that they shouldn't be lowering it even further than what you're asking for? (for example, they are quite entitled to withdraw the facility entirely after such a check.)

Granted, for the numbers you're talking about it's probably unnecessary, but they've probably got a procedure in place to do this on any change of OD limit, and it can't be overridden.
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# 3
AirCooledHeaven
Old 24-07-2009, 1:05 PM
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It's laudable that you want to reduce your current overdraft, but why would you want to reduce the overdraft facility? If you have a problem getting credit then an overdraft facility is worth having as long as it's only used for genuine emergencies or short term cash flow problems. If you have a CCJ it may be harder to put it back up again when you really need it.
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# 4
londonuk2008
Old 24-07-2009, 1:26 PM
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strange as when I recently 'upped' my overdraft limit - they did not credit check me?
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# 5
becky_rtw
Old 24-07-2009, 1:35 PM
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I just lowered mine and they didnt credit check me either - go into branch and try it - they just do it over the counter and it changes overnight
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# 6
hollypop
Old 25-07-2009, 9:44 PM
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Thanks for the advice, i may try and go in the branch as they may not be as restricted to do things the same ways as the online banking or the call centres, so they may be able to lower it without a credit check.

I know i have problems with my credit, but every month i use my overdraft, i cant stop myself using it, so the best thing for me is to just pay it off and cancel it, however it would just have been nice to pay a little off each month and then lower it rather than having to save up the full £800 then cancelling it.

Also i've just thought, are you sure that in branch they may still do a check but didnt necesarily tell you?
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# 7
stclair
Old 25-07-2009, 9:54 PM
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Natwest will do a credit check every time you reduce your limit. As in theory they are effectively taking the facility away and giving you a new overdraft at a lower limit silly i know.

It wont matter how you do it regardless it being via telephone banking or branch the same procedure applies.
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# 8
Extant
Old 25-07-2009, 10:04 PM
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Quote:
Originally Posted by stclair View Post
Natwest will do a credit check every time you reduce your limit. As in theory they are effectively taking the facility away and giving you a new overdraft at a lower limit silly i know.
Fairly obviously not the reason, as they don't credit score when facilities are removed or reduced centrally for non-use, abuse, etc.

Sounds more like a system process that wasn't thought out.
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# 9
stclair
Old 25-07-2009, 10:08 PM
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Quote:
Originally Posted by BarclaysManager View Post
Fairly obviously not the reason, as they don't credit score when facilities are removed or reduced centrally for non-use, abuse, etc.

Sounds more like a system process that wasn't thought out.
Yeah it is a system process a very silly one too.

Natwest used to offer reducing overdrafts so it was automatically reduced by say £50.00 on a certain date of the month.

However there no longer offered for some reason.
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# 10
hollypop
Old 07-09-2009, 3:44 PM
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I have just come off the telephone to a nice lady at NatWest, by calling a different department on 0845 300 5017 (not sure which department)

she has just told me that if i want to lower my overdraft i can. Online it goes through the credit checking, however if they do it through their department they can override the decision.

She said it seems stupid if a customer had trouble with their overdraft or debt and wanted to reduce it, why they wouldnt help!

so everymonth i can now ring that number and get them to reduce it by however much i want to untill it is payed off.

(although saying all this she did try to convince me it was best to keep the whole £800 overdraft and just not use it)
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# 11
blue35
Old 07-09-2009, 3:50 PM
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funny , when I applied to increase my overdraft a couple of times it give me what I asked - without any credit checks?
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# 12
foxy-roxy
Old 07-09-2009, 4:34 PM
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When i was with Barclays they used to up my limit on the phone with no checks, and RBS gave me a overdraft and upped it without the credit check.
Every bank must have different policies.
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# 13
willo65
Old 07-09-2009, 5:42 PM
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I think you'll find that although you are told a credit check will be performed because this is what the system says that the check may not actually be done if you are just reducing your limit if anyone has reduced their limit and checked their credit file would be interested to know.
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# 14
hollypop
Old 08-09-2009, 2:49 PM
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they definatly do a check online as i applied for a £700 overdraft instead of 800 and it got rejected!
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# 15
PinkPig
Old 08-09-2009, 8:05 PM
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Maybe they treat asking to reduce your limit as a warning sign? After all, there's never any actual financial benefit in doing it - the only sensible reason for asking for a lower limit is that you think you won't be able to control your spending without it.

Just a thought about the possible sane reasons for doing a credit check.
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# 16
willo65
Old 08-09-2009, 9:15 PM
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Quote:
Originally Posted by PinkPig View Post
Maybe they treat asking to reduce your limit as a warning sign? After all, there's never any actual financial benefit in doing it - the only sensible reason for asking for a lower limit is that you think you won't be able to control your spending without it.

Just a thought about the possible sane reasons for doing a credit check.
It could help when applying for loans etc if the financial instituation you want a loan from takes into account current credit available to you so if you have an o/d for £5k which you only use £2k then is worth reducing.
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