MBNA reducing credit limits

Tom_Pickering

They reduced my credit limit from £18,500 to £1,000. My account was in order, and i've been their customer for 5+ years.
Last year MBNA offered me 10 months at 0% on purchases over £250. I took their kind offer and used it to make purchases of £17k. This was money i would have spent anyway, and wasn't a moment of madness.
I used to pay the minimum £25 by direct debit each month (sounded a very stupid low payment at the time)
Then towards the end of their offer i cleared the card, with just a £7 credit on the account now.
Today got a letter about conducting a revue, listing various credit checking agencies and reducing the limit to £1,000

izools

How much do you earn in relation to the total credit limits added up across all of your accounts?

chattychappy

Lenders are required to do period credit checks and action the outcomes so they can demonstrate a responsible lending policy.

Of course this might have little to do with the reality of responsible lending or even treating customers nicely, but for them it's an issue of managing regulatory risk as much as bad debt risk.

As izools implies, you have probably fallen foul of a ratio that some oik poked into a computer.

But don't get upset - they are trying to protect you!

Tom_Pickering

izools wrote: »

How much do you earn in relation to the total credit limits added up across all of your accounts?

£40K gross income.

MBNA £1,000 (no balance)
Barclaycard £3,000 limit (all used on long term low rate)
Citi £6,700 limit (£4,300 long term low rate)
egg £13,000 (£150 long term low rate)
First Direct £6,200 (no balance)
Lloyds TSB £6,000 (£1,100 long term low rate)
Mint £7,800 (£5,100 long term low rate)

I guess it looks like a lot :eek:, but i have been handling paying it back without any problems (no mortgage etc.)

Hax

Could it just be that you're not making them any money? I mean, you borrowed £17K from them and then paid it back in full - cost them to lend the money but they didn't make any of that back from you - doesn't make great business for them - but was clearly very good for yourself!

[Deleted User]

I can see why they pulled the limit. You had 60k kicking around on a 40k salary. You've still got 43k which would give any one of the providers nightmares if you used it all. They've learnt it only takes a change of circumstances, losing your job, for them to kiss goodbye to their money.

You might want to think about cutting it down yourself before you get rate increases, due to the potential high risk. They''ll be looking to make some money now in case it all goes wrong. Not saying you're risky at all, but the potential is certainly there. Much as it is with me...

BugsyBrowne

Tom_Pickering wrote: »

£40K gross income.

MBNA £1,000 (no balance)
Barclaycard £3,000 limit (all used on long term low rate)
Citi £6,700 limit (£4,300 long term low rate)
egg £13,000 (£150 long term low rate)
First Direct £6,200 (no balance)
Lloyds TSB £6,000 (£1,100 long term low rate)
Mint £7,800 (£5,100 long term low rate)

I guess it looks like a lot :eek:, but i have been handling paying it back without any problems (no mortgage etc.)

For starters you don't like someone who can manage money very well with 40k salary and 7 credit cards.

chattychappy

star-fire wrote: »

For starters you don't like someone who can manage money very well with 40k salary and 7 credit cards.

???????????

nelly12

star-fire wrote: »

For starters you don't like someone who can manage money very well with 40k salary and 7 credit cards.

Looks quite the opposite to me you numpty. Looks like he's stretched himself right to the limit on every piece of credit he's got.:mad:

izools

Tom_Pickering wrote: »

but i have been handling paying it back without any problems (no mortgage etc.)

Unfortunately this is irrelevant.

A lot of creditors see anyone who has more than half of their annual salary available in credit as a risk no matter how flawless their repayment history is - and you had 150% of your salary available in credit!

You're very lucky that this big risk signal hasn't prompted an of your card providers to raise your interest rates - and this is still a possibility so watch out and remember to opt out if they do.

I'd seriously consider closing some of those accounts and / or reducing the limits to get you back under the 50% marker and reduce your risk, should you want to refinance anything in future

chattychappy

Bear in mind though that income information will often be well out of date by the time a periodic review takes place - and they don't get income data from the agencies.

I'm not convinced income comes into it at all - except at the time of making a new application.

I expect the factors are account behaviour, overall credit available, overall credit taken and signs of distress: only paying minimums, missed payments, multiple cash advances etc.