What is the ratio of earnings to credit limit?

Milarky

I have just had the same experience with 'Bank of Scotland' [HBOS]. They rejected my initial application for a 0% card on the grounds that current outstandsing debt [which they can see from any CR search] is too great [at 1.5 times of] current income.

Fair dos..I thought, So I tried to appeal this on the grounds that the debt was not geniune in that it was matched by cash on deposit. I even thought I was being 'clever' by showing the deposits in three categories - long term/fixed term, medium term reg savings, and instant access accounts. This way I was able to repesent my abitility to repay all but £2000 from just the instant access money. So I was a bit taken aback by their response.

This was that they would only take account of these deposits on the basis of the notional income they might generate [eg about 5% pa] rather than as offset to the debt itself.

Now this is actually illogical for two reasons. First my 'stated income' already included my estimate of the income from the savings themselves - as it was 'household income' - and they were prepared to accept this but would therefore be 'double counting' if they factored in the savings a second time. But it is also illogical therefore to suggest that the reason they cannot simply offset the deposits against other debt is that I might withdraw the money to spend. Whilst that is possible of course, if that is their working assumption then they cannot at the same time make allowance for the deposits as generating income can they?

Anyway, I probed them on what multple [if not 1.5 times income] of o/s debt would be acceptable, and whilst they wouldn't give a number they made it obvious that less than 100% [i.e. of annual salary] was necessary before they would 'underwrite' any further debt. So that's that!

I even mentioned my currently unused Sainsbury's Bank [HBOS issued] card and suggested they could do a swop over it, but this didn't help either because they said it was a 'different' company in effect and anyway I still owe £3000 on my Halifax One. So even after I have paid that back in March I would look over-extended and they don't have to re-lend the money if they decide not to.

...very annoying, but I hope that helps

[BTW total 'credit limit' is about £70k or 5 times income of which about 30% was used up 'stoozing' at the time of the BOS application - They may worry about the extent of unused credit line a bit but the main issue is the o/s debit as far as I can see]

realaledrinker

Milarky,

You need to give them a reason to want to lend you the cash. You are telling them that you are a Stoozer who will take their money, earn interest on it & pay it back at the end of the interest-free period. Who will lend you money on that basis?

By revealing your offest savings, you are removing any incentive for them to offer you a 0% deal.

travel_freak

Hi Milarky,
Thanks for your very full reply. It seems they're determined not to line our pockets further! From what you say it seems hardly worth the trouble of entering into lengthy correspondence with them about this as it seems they have a standard policy/line which they're going to stick to. I think the well published cases of people getting themselves into ridiculous amount of debt on credit cards has made the major companies adopt a firmer line. Still, you've reminded me that I have a Halifax credit card somewhere so I might try asking if they would do a swap or reduce the limit on that one and give me a low limit on the new application. It's worth a try. Meanwhile I think that per "realaledrinker" I should work on thinking of an "incentive" for them to lend to me.

Thanks again for the advice.

johnllew

I have just had the same experience with 'Bank of Scotland' [HBOS]. They rejected my initial application for a 0% card on the grounds that current outstandsing debt [which they can see from any CR search] is too great [at 1.5 times of] current income.

I think we're going to see more of this happening in the future which is why I rarely cancel a card unless there is an annual fee imposed. Repeat offers from existing cards (18 in the last 12 months) enable us to keep a high amount in the air on a regular basis.