0% overdraft on current account

Derivative

Hm, might have to shy away from that then, I'm already having enough trouble getting credit (awaiting the reply from Vanquis, CapOne turned me down at 29.9%).

ses6jwg

As said, it doesn't damage your credit score in the same way a missed payment or exceeding your limit would, but it makes you look more of a risk as it appears to underwriters that you cannot manage your finances and have to effectively rely on credit for everyday spending.

Remember, underwriters do not take savings into account.

I was declined for 2 credit cards and an overdraft, and a current account went to refer because of deficit banking.

As soon as I stopped doing it, 3 months later I was accepted for a CC with 3.4k limit and a max OD of £1400.

loveandlight

posted by ses6jwg
As soon as I stopped doing it, 3 months later I was accepted for a CC with 3.4k limit and a max OD of £1400.

Did you stop using your overdraft all together then and thats why you then went on to be approved for a cc and another OD?

ses6jwg

loveandlight wrote: »

Did you stop using your overdraft all together then and thats why you then went on to be approved for a cc and another OD?

I brought the 0% back to £0 balance and stopped using that particular account.

Have you ever looked at a credit report? It shows your balance at the end of each month.

On my Natwest Student Account, for the last 4 years it would have showed as negative every single month as I used to "stooze" my pay and live in my overdraft.

I then went to Santander and opened a new account (overdraft declined, on 2 occassions), got my pay put in there and lived in credit for 3 months. Then I closed my Natwest Student A/C and was accepted for CC and OD with Santander.

I suspect a lot of it came down to internal behavioural scoring, but I still remain convinced this deficit banking technique also did some damage.

loveandlight

Interesting. Thanks for explaining it. I have never used an overdraft throughout 30 yrs of banking you see so don't have much knowledge about them and how the banks view them. The past three months however I took one out and have used it but plan to clear it at the end of January and won't use it again. I don't like the thought that once given it, the bank then view you in a negative light for using it.

ses6jwg

loveandlight wrote: »

Interesting. Thanks for explaining it. I have never used an overdraft throughout 30 yrs of banking you see so don't have much knowledge about them and how the banks view them. The past three months however I took one out and have used it but plan to clear it at the end of January and won't use it again. I don't like the thought that once given it, the bank then view you in a negative light for using it.

They won't view you in a negative light for using it, quite the opposite I'd imagine.

However if you are seen as "reliant" on your OD, same applying to credit cards, this will reflect badly on your "behavioural scoring"