No risk = not creditworthy?

oscardog

My wife and I earn around 100,000 pounds per annum, have no debts apart from the mortgage , pay our cards off in full each month and so have the best cashback offers around.

We were therefore very surprised when Virgin rejected our application for a new credit card (we are going to start card tarting but they would not know that!!).

Is it that because we are not potential money makers for the card company that they deem us not worthy of custom. It is even more odd because we have both changed cards in the last couple of years at our current address and have made no credit applications apart from the changes a year ago and this one.

Is there a potential conspiracy by companies that will only offer credit to those likely to make them plenty of money whilst freezing out those who can exploit the benefits of credit cards?

Rafter

Sounds very unlikely.

More likely some mistake in doing your credit search or processing your application on their part.

Suggest you give them a call or get a copy of your credit record.

If you have changed cards fairly regulary and have previously had an MBNA card (MBNA, Virgin, Alliance & Leicester or Abbey) then you may have fallen foul of their new anti-tarting regulations.

I think you may have answered your question. Why should any company offer you a product your are going to 'exploit'?

R.

JasonW_2

Reckon you could be right. They see it that you don't need one so why should they make a loss or no profit just for the sake of you having one?

It should not be like this of course, but it seems to be companies like an element of risk, but to an extent for all sorts of reasons and you are "overly qualified" to apply. Could be wrong though, would be no harm in trying some others if your credit risk is as good as you say.

JW

student100

oscardog wrote:

Is there a potential conspiracy by companies that will only offer credit to those likely to make them plenty of money whilst freezing out those who can exploit the benefits of credit cards?

I doubt it. If I were you I'd be thinking there was either (a). a problem with your credit file, or (b). they made a mistake e.g. entered your income into the application incorrectly.

I'd have thought it would be a good idea to get your credit report (from Experian and Equifax) to check there's nothing wrong there - if not either try querying Virgin about it or applying somewhere else...

dag_2

Is there a potential conspiracy by companies that will only offer credit to those likely to make them plenty of money whilst freezing out those who can exploit the benefits of credit cards?

I don't think there's a conspiracy going on - but as you've noticed, credit card providers are businesses, and are only really interested in making a profit.

There's only one way for a credit card company to eliminate risk completely - and that's to freeze everyone's account, and stop issuing new cards. But if they did that, they wouldn't make any profits.

So - when they're assessing your application, they're not only trying to eliminate risk - instead, they're trying to balance the risk against the profit potential.

Although they try to assess the risk of you running up debts you won't pay, that's not their only risk - they also run the risk of third-party fraud losses that can't always be recovered from retailer chargebacks. Point is, don't take the idea of risk on your account personally - because it's not just about you.

If the risk is bigger than the profit potential - they don't issue the card.

And in your case, since you earn £100,000 a year and have no existing debts, the profit potential is very small indeed - and is therefore wiped out by the modest risk of your card being nicked by a mugger. This is especially true for cards with low interest and high cashback. But for other customers, these risks might be worth running.

But as others have said, it's a good idea to find out if there's a mistake on your credit file too.

nearlyrich

See this post from earlier in the week

I got turned down for Lloyds TSB and my appeal wasn't allowed either. Not too worried because I have a deal with a 0% Barclaycard.

Like oscardog I have a good salary, no debts not even a mortgage so the only reason I can see for being turned down is that they decided they wouldn't make any money from me.;)

student100

If you have an income of £100,000 plus and no debts, there certainly will be cards that want you as a customer - the cards often branded as "Platinum" cards, and AMEX etc - but they probably won't give you a 0% rate for stoozing. 0% rates are offered as incentives by CC companies to those who they hope will hold an interest-bearing balance at some point in the future. With income like that and no debt you're not likely to need to hold a balance on the card after the 0% rate so they're not going to offer you one.

empfun

Hi oscardog, how about a Beyond Black credit card from Arbuthnot Latham?

realaledrinker

Dag,

Are your comments just supposition or do you work in Credit Risk for a bank?

Me & the missus earn about £130K between us, have no debts other than my stoozing & yet I have still managed to get upto 110% of my income on my stooze cards.

I remain to be convinced that banks get down to the level of analysis that you claim. In my case I reckon they see my income, see the level of debt, see I have no late payments or defaults & think "we'll have some of that!". They can't know that it's all on 0% deals.

Fatboy_NSS

Do you have an overdraft and credit card limits that you aren't using? If so it's likely that the system is seeing that you have plenty of unused credit available, so is worried why you need to apply for further credit.

ksh123

oscardog wrote:

My wife and I earn around 100,000 pounds per annum, have no debts apart from the mortgage , pay our cards off in full each month and so have the best cashback offers around.

We were therefore very surprised when Virgin rejected our application for a new credit card (we are going to start card tarting but they would not know that!!).

Is it that because we are not potential money makers for the card company that they deem us not worthy of custom. It is even more odd because we have both changed cards in the last couple of years at our current address and have made no credit applications apart from the changes a year ago and this one.

Is there a potential conspiracy by companies that will only offer credit to those likely to make them plenty of money whilst freezing out those who can exploit the benefits of credit cards?

this happened to a friend of mine a few years ago - its an anomaly that in order to have a credit rating you have to have credit!! she wanted an M&S card at the time so I just phoned them up and told them off saying they were discriminating against her because she didn't have any debt and that this meant she couldn't benefit frm the convenience of a car or the special card-holder offers. She got the card.