Credit refusal - working out why...

gromit69

This is stressing me out a little, so please forgive me if I've missed anything obvious...

I've applied for credit twice in 2010 and was turned down both times. I know that finance companies are being more stringent, but I always thought I was OK...
So far I've had a clean record. No missed payments, always approved previously. I've got two loans (Santander and Nationwide) and two credit cards (Virgin and Tesco). I wanted an HSBC card earlier in the year (June time) to tart to the 0% rate. This was turned down.
A month ago, I tried to get a 0% interest deal on an Ikea sofa. This was turned down too.
I ordered my credit report from Experian (as recommended by the Ikea finance company) and that is accurate *apart* from an error in my address. I've lived at this address twice, and the 'current' address shows this address from 5 years ago.
The other issue is that Virgin reduced my credit limit back in May time, and then hiked the interest rate. I rejected the rate rise, and so the card is 'inactive'.

The only reasons I can think of are:
The address error is causing an issue
Virgin reducing my limit is flagging up in checks
or I've just reached an unacceptable amount of debt.

Any thoughts? I'd really like to get away from the Virgin card - I'm paying interest on it now, and I really don't want to!

Many thanks!

immoral_angeluk

How much do you earn amd how much do you owe or have the avaiable credit for?

gromit69

I always feel uncomfortable with this, but:
Income - £44000
Loans outstanding ~ £14000
Credit cards outstanding ~ £6500

Thanks

lisyloo

Apologies in advance if I have this wrong, but why do you have so much debt on a decent salary?

I may have this wrong and you might be stoozing but to 3rd parties looking at your record, they may assume this is real debt and you cannot manage to live withing your means.
On that salary you should be able to fund a decent pension AND savings.

I could have that wrong and you might have some clever stoozing or investing scheme going on, however the important thing is how this appears to 3rd parties and the immediate assumption is that you can't live on a decent salary and are getting further into debt.

Don't shoot the messager please, I am only putting forward how this MAY appear to potential creditors.

immoral_angeluk

gromit69 wrote: »

I always feel uncomfortable with this, but:
Income - £44000
Loans outstanding ~ £14000
Credit cards outstanding ~ £6500

Thanks

Don't feel uncomfortable, the reason I ask is how much you owe already is one of the biggest things they look at when deciding on whether you can afford anymore. On an income of 44k, anything over around 20-22kish would be seen as a high credit risk, so this could be one of the reasons why you're being rejected.

ironlady2022

Who do you live with? Does your partner or Husband have bad debt? Could be something to do with address. The amount of income compared to debt is a good ratio and I would say nothing to worry about. When was the last time you looked at your credit report? As it always gets updated?

lisyloo

Could be something to do with address

This is wrong.
Addressses do not have credt information related to them, only people.
Another person would only affect the credit rating if they are financially associated. This generally means having a joint account.

The amount of income compared to debt is a good ratio

No-one knows lenders exact rules, but generally a lot of people think 50% is about the limit in the current credit crunch circumstances, so I agree with immoral_angel that you are probably at the limit of credit you can get for your income.

Should you think about paying some of it off, rather than taking on more?

gromit69

Thank you all for your replies.
I was under the impression that 50% was roughly the 'limit' as well.

The question about the address was because the current address may be showing up as only valid until a few years ago (about 5). I know that address mismatches can cause issues (especially if not on the electoral role!).

The amount of debt is coming down - I only wanted the 'extra' credit to get 0%. The old credit card accounts would then be closed. The Ikea loan would have made life a little easier paying off the amount over 12 months rather than in a lump sum.

Admittedly, we (my family) did live beyond our means for a while, hence the debt. But we sorted it out a year or so ago.
I'm guessing that while the debt is coming down, the ratio is coming down too, making it harder to tart credit cards.

lisyloo

I only wanted the 'extra' credit to get 0%. The old credit card accounts would then be closed.

This is good news.
However lenders don't have any guarantee about what you will or won't do and have no idea about your intentions or attitude.

Unfortunately lending criteria are still very tight at the moment and banks just don't have the money to lend due to tigher regulations requiring them to lend out at a lower ratio.