Virgin/MBNA reducing limit

dux001

Hello everyone. Just a little bit of info here, rather than a request for advice. Thought I'd share it.

A couple of months ago I applied for a Virgin card to do a 0% balance transfer of £1300 from a fully up to date Capital One card that charges 27%. Now, in the past, my credit rating's been poor...I was bankrupt back in 1996 and until six months ago I wasn't on the electoral roll either.

So I was pleasantly surprised when they agreed, and gave me a credit limit of £2,500, with 0% on balance transfers til Oct 09. The balance has been transferred and a DD set up for the minimum payment.

At the same time I also applied for a Mint card, they gave me 0% on purchaes til Feb 09. This has a limit of just £850 but that's all I need. This will be used as my "purchases" card, because I'm aware of the way payments are allocated on balance transfer deals.

All in all I consider I've been unusually financially smart with all this - and much of it is thanks to this site.

However, today MBNA (who issue the Virgin card) sent me a rather curt letter saying they have reduced my limit to £1,500 following a review of my financial circumstances and the way I manage my account. Well, the first statement hasn't even come out yet, so "the way I manage the account" would be a bit difficult for them to quantify - literally all I have done is transferred £1,300 onto the card, nothing else.

Now in reality I'm not bothered....that limit is enough to cover the balance transfer. However, I am concerned that they might also have mucked about with the 0% deal and the interest rate (which would be 14.9% if I did purchase anything).

Would they have included this in the letter? I note from posts on here that some people have found they have just changed things without telling anyone!

YorkshireBoy

I agree it's a little strange to reduce your limit so soon.

Just to speculate on why this may have happened...I think most credit scoring/limit setting is done automatically. However, I have noticed on my own credit reports that there are sometimes two searches associated with a credit card application.

The first is labelled "search type: credit card application" and the second is labelled "search type: ID generic enquiry" (or some other similar wording). The second search is of the 'unrecorded type' so isn't 'punishing' because it won't be seen by other lenders.

My theory is the second search is made manually by an underwriter...perhaps to check that their automatic credit scoring is working as it should. I don't think they do this with every application (not enough time surely?), but pull out perhaps a random sample...maybe you were 'borderline' accept, or just unlucky (ie they selected you for some sort of training exercise for a rookie underwriter?).

Re the 0%, I wouldn't worry too much. Unless you breach the T&C's you won't lose the 0% deal.

I don't believe they just change things without telling you. They are allowed to tell you certain things 'after the event', but you'll get notice for the most important changes.

BTW, 14.9% APR is very good. The typical rate is 15.9% APR.

clio

Well anything Virgin does nowaday i am not surprised, why accept you then reduce your limit is strange unless the computer passed you, then a look at the application by human being is probably how it happened. still at least they did not revoke your account all together.

dux001

Thanks folks...yes, I suspect they have done a manual search and discovered either (a) that I have only been on the electoral roll six months (though they did spot this at the original application, asked me to phone in, and then manually approved it), or (b) they have discovered I was bankrupt in 1996. I am always told bankruptcy goes off the record after six years but I know for a fact it doesn't because I applied for a bank account with RBS and they quite openly told me they were refusing me due to my 1996 bankrupty!

I have rung Virgin today and they've confirmed the account benefits are still in place.....does seem a little strange to do this so soon and of course the card is now within a couple of hundred pounds of the limit, which I'd rather not have done. Still, since no interest is going on it and I shan't be spending anything on it (I shredded the PIN notification to prevent this 100%!) and there's no payment protection going on, this shouldn't be an issue.

To be honest, since as a former bankrupt I am very borderline I was surprised they offered me £2,500 in the first place...£1,500 would have been more in line with my expectations. I remain quite pleased that I have got a "mainstream" card such as this.

My only real issue with it is 1) the letter was rather curt and 2) the letter was branded MBNA, now I happen to know Virgin is provided by MBNA but what of people who don't?

Also, what would have happened if I had gone out and blown the whole £2,500? Would they now be requesting repayment and defaulting me for being over limit?

clio

So is your Mint card CL still in place as it was when they gave it to you, unless thats what made them reduce it
coz they found out[how] you have another card and thought you were a little bit risky seeing as your bancrupy is
still on your file and they were being over careful??

dux001

clio wrote: »

Somis your Mint card CL still in place as it was when they gave it to you, unless thats what made them reduce it
coz they found out[how] you have another card and thought you were a little bit risky seeing as your bancrupy is
still on your file and they were being over careful??

yes the Mint limit is still there, but that was only £850 to start with.

The bankruptcy isn't on my file in the normal sense, in that I have downloaded my credit report from Experian and there is *nothing* untoward on there at all, apart from all the searches recently for credit cards and bank accounts (about 8). Plus it shows me as being on the electoral roll for only six months whereas the green "ticks" show me being at the address since 2004.

RBS knew about the bankruptcy though so it must be available somewhere...which begs the question...wherE?

Also it seems if you were to rape someone then ten years later you are completely clear yet go bankrupt and it's with you for ever. Nice.

clio

Yeah doesn't seem fair does it Dux, has Mint upped your limt at all if they have surely thats an indicatation things are not too bad !!