Overdraft reducing - credit check?

petrafyde

Hi all,

I've just been onto Natwest to find out how I would go about decreasing my OD to be told this! I've posted it into this forum because NW are classifying it in the same category, hope this is ok! Figuring this will give other consumers more information - I certainly didn't know this until today.

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Tamara: Hello, you're chatting with Tamara. How can I help you today?
You: Hi, I've a few questions if you don't mind.
You: Basically I was struggling with my overdraft, but things are starting to improve. I'm wondering if its possible to reduce my overdraft by a marginal amount monthly rather than remove it all at once?
Tamara: If you wish to reduce your overdraft limit, please contact our Standard Number on 0800 200 400 or visit your local branch. Please keep in mind though that if you choose to reduce your overdraft limit every month you will be credit scored. The other option is to take out a loan to clear your overdraft, however your overdraft limit will be immediately decreased to £100. However, after 12 weeks you can apply to increase it again.
You: I see, what do you mean by credit scored?
Tamara: You will be credit checked for any borrowing you apply for.
You: Well I thought that was the case anyway? I'm just wondering why reducing my overdraft over a monthly period to get it down without having to borrow should mean I'm penalised (if you see what I mean?)
Tamara: This is our bank's policy.
You: Yes. I'm saying I dont understand how I can be credit checked when I don't apply for anything?
You: I would be credit checked when I applied for a loan to pay off the overdraft anyway, right?
Tamara: You are applying for a overdraft decrease. You would be credit checked for a loan application.
You: I'm sorry I'm getting really confused
You: If the money is there in the account, and I want to remove part of a service, ie: £300 of a £2000 overdraft, I get credit checked?
Tamara: Yes, you would.
You: But why? I'm giving them money back which they've previously 'loaned' to me?
You: Hello
Tamara: Even if you are decreasing the limit, you are still applying.
You: Okay I think I see what you mean. So because I'm applying I get credit checked. What about if my credit rating is extremely bad (and I wouldn't be given finance anyway) would they refuse to decrease it? Sorry to seem dim but this seems really strange!
Tamara: Potentially we could ask for you to repay the overdraft facility back if you are declined for the decrease in your overdraft facility. If you have any further queries in relation to your overdraft, for example on how to manage it, please contact our Standard Number on 0800 200 400 or visit your local branch as they will have access to your personal details.
You: Right, well it's no wonder I've been scared to call Natwest then. Thanks for your advice, I've no other questions.
Tamara: You're welcome. Have a good evening.
Tamara: Thank you for chatting with us. Your feedback is valuable to us. Please click the "Close" button on the top right of the chat window to tell us how we did today.

To be frank, it's no wonder people are scared to call up and be honest about their finances? I asked these questions because I'm sorting out my debt which had spiralled out of control after losing my job four years ago and bank charges (another story) amongst other things were a massive factor in my acquiring an overdraft to start with.

I'm interested in your thoughts and experiences w/regards to Natwest and their OD policies, or perhaps another bank who you've got an agreement with. One person who posts regularly in my diary has an arrangement, but I'm curious as to how these come about and who I might speak to. The aim is to avoid further credit file botherings. Thanks a lot in advance!:T

CLAPTON

I'm not quite sure what question you are asking.

While completely rational from your point of view to ask for a gradual reduction in OD to 'help' you budget, you are nevertherless sending very strong alarm bells to the bank that you are likely to default or at least aren't in control of your finances. This is not a welcome message and is likely to influence their attitude towards you (i.e. increasing APR on the OD and reducing your OD without your consent.)

Arrangement to pay are usually entered into only when the person is struggling to pay and is often marked on your credit file with negative consequences.

However, as I say, I'm not sure exactly what you are asking.

CG19a

I had the same thing happen. I was paying off a £400 overdraft, reducing it to zero in one go and had to have a hell of an argument to not get credit checked to remove my overdraft. Apparently the way their system works is that to reduce your overdraft you have to "apply" for a new overdraft and then that application overrides your current overdraft and so on.

petrafyde

Hi Clapton,

I was looking for other peoples thoughts and experiences when reducing OD's basically - this credit check thing which although obviously works well for them, just seems to cause more stress for the consumer? The point I was trying to put across to the rep. was how silly it seems for them to be credit checking someone who wants to repay money?

Thanks to the staff member who PM'd me also.

CG19a, this is the thing - I appreciate it works well for them etc but it doesn't help us trying to sort out our own finances does it. I could be in a terrible state financially, or I could be fine - I object though that they're allowed to go routing through my financial information per se, before they allow me to remove a service which is on my account.

minimike2

Its Bonkers!

petrafyde

Can anyone clarify why they're allowed to do this when the consumer is effectively trying to reduce their debt?

LilacPixie

RBS do the same.

what I have done is opened abouther bank account with no lending facilities. waged go into rbs account. DD leave rbs account alone with a SO to fund my daily spends suchas food and fuel. surplus amount lives in RBS account until one day I can call then and say close the account.

Zelie

I'm slightly confused as to why you want to reduce your available overdraft anyway. If I understand your post correctly you are wishing to repay the overdraft, yes? Why would reducing the available cash make any difference? I would have thought that repaying the overdraft is obviously a good thing but why not just keep it available just in case you need it? (Unless of course you are not so good with temptation, in which case I understand).

LilacPixie

I can't answer for the OP but for me its all about risk/ tidying up my credot history. W have a large overdraft but only actually use less than 50% of it. On my credit record it shows i have say a 10k availible o/d but only useing 4.5k so essentially I have 5.5k of borrowing pre approved just not being used. This can make companies jittery when applying for 0% c card deals as I have a high about of unused borrowings.

I could call RBS and ask them to remove 5.5k of the overdraft and therefore reduce my limit from 10k to 4.5k but RBS would then credit score and check me.

Also for me i worry about card cloaning. If I am operating with theminimum overdraft needed then there is less availible if someone happend to get hold of my card details.

I cannot clear mine in one month as unfortunatly my surplus income doesn't cover the full amount.

Zelie

Thankyou for explaining. I hadn't realised having a large unused overdraft could affect lending!

inmypocketnottheirs

A few years ago I had an o/d with the (un) Co-operative Bank. I reduced this by £20 per month without any of the procedure outlined above.