Refused credit and mystified.

Frog_Prince

I recently asked my bank of six years to give me a short term overdraft facility after I paid for a car with most of my cash from my current account (rather than paying for it with an expensive finance deal). The proposed £200 overdraft would be cleared by my salary cheque in less than three weeks. The bank refused, despite my always having a large amount in the account (the surplus once reached £45,000 - i.e. the bank was effectively borrowing up to £45,000 from me).

The bank did not want to tell me what the problem was. First, they tried to tell me that overdrafts are for a minimum of one year, not a few weeks. Then they said that I must borrow at least £5,000, they can’t consider lending £200. Then they said overdrafts are only given to people who earned in excess of £100,000 a year, and that this was a brand new rule introduced only in the last few weeks.

This didn’t sound like the truth, so I asked about my credit score. They said they hadn’t even looked at my credit score, and that they could see my account had a very healthy turnover (about £30k/year). But they still would not allow me an overdraft.

Frustrated, I came on to MoneySavingExpert.com to see if could find something to help me work out what’s going on. I found the link to MoneySupermarket.com's "soft credit search" tool which checks the CRA CallCredit and that told me that my credit rating was "Excellent".

It also said I had an 80% chance of being given a credit card by Virgin/MBNA, so I applied for one (I don’t have any credit cards right now).

Virgin/MBNA refused my application, saying:

"We have used a credit scoring system which looks at the information that you put on your application, information at the credit reference bureau and our own experience of customers' accounts.

If you'd like to take a look at your credit file, you can contact the agency below:
Internet address (the CRA was Experian. I'm not allowed to post the link)
Telephone number 0844 481 8000"

Virgin/MBNA told me to try Vanquis instead.

I am baffled.
(i) I have a strong personal balance sheet, I own a £310,000 flat owing nothing to the mortgage lender, Natwest, whom I paid off early without a single late payment. It’s not like I have no credit history if I’ve paid off a mortgage.
(ii) I have no liabilities.
(iii) I have a strong personal profit & loss account, with a good salary and frankly modest expenses.
(iv) I even have good personal cash flow. My expenses have never exceeded my income at any point in time other than this month, when I bought my car with a single cash payment.
(v) I am single and do not have any dependents.

Yet my bank of six years will not lend me £200 and I've been turned down for a credit card.

Anyone know what's going on?

mazy_m

Perhaps you're not enough of a risk so effectively won't make them any money!!

It's crazy how it works sometimes!!

YorkshireBoy

Frog_Prince wrote: »

(ii) I have no liabilities.

So no active overdraft facilities, mortgage, loan, or credit cards are showing on your credit report?...ie there's no current/recent evidence of managing debt? What about previous history?...ie how recently did you have some liabilities.

Have you viewed your credit report? When you do, check it shows you as being on the electoral roll.

And if I was paying £30K per annum into a current account and they wouldn't give me a £200 overdraft facility I'd be changing banks. Don't close the old one though because '6 years with bank' will help improve your credit rating (might not appear so at the moment but 6 years is far better than 1 month!).

2sides2everystory

On the face of it this really does show what a nonsense and useless thing a Credit Reference Agency record is.

I move that the government should be strongly lobbied to make CRAs illegal enterprises, and for banks to start doing a proper job.

Trouble is all that data will be too tempting for someone on the inside and instead of it being safely destroyed it'll all start turning up and damaging the population in untold ways like cluster bombs in Misrata

So as no-one has the b*lls to dismantle what has become a monster it looks like we're stuck with the current unsavoury regime for the foreseeable future :mad:

Russe11

Internal Scoring works in strange ways, as does the way the sales systems they have in place.

I remember years ago going in to branch, suggested a small over draft to just make sure I was covered with some directs debits due in the next few days, computer said no.

Salesperson suggestion was, lets try for a credit card instead!

dealer_wins

Im sorry but I simply dont believe the OP.

Dr_Cuckoo3

Its difficult to comment without knowing the name of the bank

Halifax overdrafts can be applied for online - enter £9999 and it will reject this and display your pre-approved amount

Barclays have pre-approved overdraft offers via internet banking

Most - if not all banks have pre-approved overdraft limits (some may be subject to an affordability check ,others may have been scored monthly in advance using Experian Delphi score etc)

The OP doesn't mention whether he is on the electoral roll

£200 is a pitiful amount to beg a bank to lend you for less than a month

I think a payday loan of £200 would cost £50

Dr_Cuckoo3

Frog_Prince wrote: »

The proposed £200 overdraft would be cleared by my salary cheque in less than three weeks.

also worth pointing out that the OP is paid by cheque

Rupert_Bear

Surley if your own bank will not loan you a few pounds then there has to be something adrift. They can see your ingoing and outgoing amounts. They obviously view the OP as very high risk. I dont understand why you would exhaust your current account for a car and leave no money available to meet your daily needs. Just does not make any sense to me.

Russe11

Dr_Cuckoo3 wrote: »

also worth pointing out that the OP is paid by cheque

good point, makes a big difference.

Rupert_Bear

Dr_Cuckoo3 wrote: »

also worth pointing out that the OP is paid by cheque

Perhaps then they do not trust the OP to put funds into the account as it is not done by bacs. Also the OP does not say how long they have had the account. May only be a few months.