Raising Credit Limit for Student with Business

patwa_2

Hello.

I don't know how much of a mess I've got myself into, probably mostly due to not kknowing all there was to know, but I'd be grateful for any help you can offer.

I'm a student at University at the moment, however I'm also a sole trader running a business from home selling products online.

I got a Natwest Student Mastercard in August last year with a credit limit of £350. My friend is with HSBC and only has a £250 limit, so naturally I was rather pleased with this. This is my first ever credit card.

I only started to really make purchases of stock for my business in January this year, and as many of the purchases are made over the internet and from abroad, I needed to use the card. However, I am finding that the credit limit is too low for me - many of the purchases exceed £500 or £1000 and have to be made by bank transfer. This lengthens the average time from initial order to item delivery from 10 days to six weeks.

I called Natwest, and I explained the situation. They told me I was not supposed to use the card for business purchases, something which I genuinely did not realise. I said that nevertheless, I wanted a credit limit rise. They said they could give me £400, but any higher than that and I would have to write to them, sending proof of funds. I can do this, as I do have an account with another bank with funds more than enough to cover the repayments for a higher credit limit. I told them that ideally, I was looking for an initial rise to £1000.

The problem that I now face is that I now KNOW that my credit score/limit is 350. I did a signup to the lending exchange Zopa, to try to make a bit of extra cash, and they tell you your score as an optional step during the registration process.

This having said, I would like to know what I can do to raise the limit. I'd like to change cards to one with a lower rate and maybe 0% interest special offer. I was just turned down by Morgan Stanley for an application made online, and do not qualify for the 21 years minimum age limit cards.

I looked at my credit file in September last year and did not find anything unusual on that. The only thing is a record for an Egg account that I applied for when I was 16 that I no longer use and have never used. I will close this today. So I can't see what's causing me to be turned down, and don't want to risk another application as it willdegrade the file even further.

So my two questions are:
1. What can I do to sort out the credit file issue?
2. What can I do about getting higher credit limits so I can make credit card purchases for my business?

I went through a phase when I was 14-15 like many other kids of applying to companies for credit cards. I of course now know that it's no wonder I was unsuccessful, but the only saving grace is that none of these records were on my credit file. The only records on there seem to be those that I knowlingly and deliberately made, e.g my mobile phone, bonds with the building society, bank accounts and of course the Natwest card.

Sorry for the rambling post, and thanks very much in advance for any help.

---lee---

patwa wrote:

I called Natwest, and I explained the situation. They told me I was not supposed to use the card for business purchases, something which I genuinely did not realise. I said that nevertheless, I wanted a credit limit rise. They said they could give me £400, but any higher than that and I would have to write to them, sending proof of funds. I can do this, as I do have an account with another bank with funds more than enough to cover the repayments for a higher credit limit. I told them that ideally, I was looking for an initial rise to £1000.

I would accept the new credit limit. It's going to be difficult to prove your income as your essentially self-employed. Then give it a few months and try for another increase. Once the lender can see that you use your card responsibly, they may be prepared to make further increases.

The problem that I now face is that I now KNOW that my credit score/limit is 350. I did a signup to the lending exchange Zopa, to try to make a bit of extra cash, and they tell you your score as an optional step during the registration process.

That's an indication of your credit score. Every lender calculates their own scores using their own criteria, so really it's meaningless.

Be aware, that by registering with Zopa you will have caused a credit search. Credit searches automatically disappear off your credit file as time passes (maybe 3 months, can't remember) but each credit search that you trigger through applications can be held against you by lenders when they calculate your credit score.

This having said, I would like to know what I can do to raise the limit. I'd like to change cards to one with a lower rate and maybe 0% interest special offer. I was just turned down by Morgan Stanley for an application made online, and do not qualify for the 21 years minimum age limit cards.

Again, that's another credit search. The more searches you make, the more desperate you will appear to lenders.

I looked at my credit file in September last year and did not find anything unusual on that. The only thing is a record for an Egg account that I applied for when I was 16 that I no longer use and have never used. I will close this today. So I can't see what's causing me to be turned down, and don't want to risk another application as it willdegrade the file even further.

It's normal for your credit file to show any accounts that you have. I can't see what harm your egg account will be doing.

So my two questions are:
1. What can I do to sort out the credit file issue?

Nothing. There's no issue with your credit file, at least none that's apparent from your post.

2. What can I do about getting higher credit limits so I can make credit card purchases for my business?

Keep making your payments on time. Don't go over your credit limit. I don't think there's a lot you else can do at this stage. Your credit file is not a problem, it's more that you don't really have any credit history.

I remember something about pre-pay type credit cards where you effectivly have to charge them up with cash before you use them. These are available to people without credit histories. That may be an option. Sorry, but I can't remember what they are called - no doubt someone else will. You could also use a debit card if you have one, but you will lose the protection that CC payments offer.

I went through a phase when I was 14-15 like many other kids of applying to companies for credit cards. I of course now know that it's no wonder I was unsuccessful, but the only saving grace is that none of these records were on my credit file.

Hmm, I don't remember going through that phase myself. Hopefully, it's not damaged your credit history.

patwa_2

Hi lee, and thanks for your post.

Good to hear that my file is clean as far as it causing problems is concerned.

I have paid everything due on time up until now, and have only been late, once, in March this year due to the electronic payment taking over the time limit that I had to make the payment. so that is fine as far as being an obedient customer is concerned.

I'm still confused about the credit limit issue. If the low limit is due to my not having a credit history, how is it ever going to increase? I know this sounds crazy, but it's almost as if they WANT you to end up in a mess and have listings on your file so that they can give you higher limits! As for not having any history, I have at present 4 current accounts which I use regularly, which are on my file, each has a debit card, 2 of which I use regularly, and there is the one credit card. How much more can they want?

Looks like from what you're saying I'm pretty much stuck in a rut at the moment. Can't use debit cards, as they're not accepted online in foreign stores. And bank transfers just take ridiculously too long, meaning I have to purchase even more stock to make up for the time lag, which means a higher expenditure with less chance of a return.

Hussein.

Rafter

Hussein,

Your credit limit is based on your income, which as a student isn't much.

The fact you are operating a number of current accounts may worry some creditors too.

If your 'business' is going well can you not create a credit balance on your credit card (ie overpay it) to enable you to make larger purchases?

The other option may be a pre-paid credit card where you can load it up with sufficient funds.

Good luck.

R.

patwa_2

Rafter wrote:

Hussein,

Your credit limit is based on your income, which as a student isn't much.

The fact you are operating a number of current accounts may worry some creditors too.

If your 'business' is going well can you not create a credit balance on your credit card (ie overpay it) to enable you to make larger purchases?

The other option may be a pre-paid credit card where you can load it up with sufficient funds.

Good luck.

R.

Hi. Can I do that? Overpay on the card and then use it? It won't cause any problems i.e suspicious activities or anything like that? Also, I suppose I could always withdraw the 'additional' funds off the card later if needed, depending on whether or not there was a withdrawal charge. Also, how would the overpayment be viewed, seeing as essentially I am turning the card into a pre-payment card and am using my own money not theirs (it's essentially turned into a debit card).

Hussein.

file_wizzard

Is it the case that you need the credit itself to make the purchase’s, or just the use of a visa / master card ?

if your cash flow allows why not use a "pre-paid" card such as the "mycashplus" to facilitate your purchases

https://www.mycashplus.co.uk

patwa_2

Hello, just wondering, could you possibly recommend any decent pre-payment cards? They don't seem to be that common as they're not showing up on comparison sites and al The cash flow would allow it, not to mention it'll probably help keep the business in check.

Hussein.

asot

patwa wrote:

Hi. Can I do that? Overpay on the card and then use it? It won't cause any problems i.e suspicious activities or anything like that? Also, I suppose I could always withdraw the 'additional' funds off the card later if needed, depending on whether or not there was a withdrawal charge. Also, how would the overpayment be viewed, seeing as essentially I am turning the card into a pre-payment card and am using my own money not theirs (it's essentially turned into a debit card).

Hussein.

You can definately overpay on the card and then use it. One thing I would warn you was my friend was in a similiar situation with credit limits and when he overpaid into his Natwest card he would have to wait longer than usual for the credit to be available. Usually you wait about 3 days for the payment to appear on the card, but even after that u need to allow a further 4 days on Natwest for security checks I think.

Give Natwest a call and confirm the exact times, as I say there was definately a bit of a wait before he could use it as I remember him getting so annoyed with them!

edandersen

This is very odd, when I applied for the Student Natwest Mastercard job along with my student bank account, I had a £1000 credit limit offered to me straight off the bat. Have they tightened their criteria recently?