BEEN REFUSED CREDIT? Read this first...

lee1985

I think this needs to be made a sticky.

Many people come on this forum to ask questions/for advice about being rejected for credit and MSE users basically type the same advice over and over. So, I thought it would be a good idea to make a sticky listing many possible reasons why one can be refused credit so as soon as they visit the forum they can see a relevant thread.

If this is not made a sticky then fine, but it makes perfect sense so here goes - I'll have a bash. Just trying to help and make this place a better site for all

Reasons why you have been refused credit:

- You've had a default, a CCJ, a Debt Management Plan, a payment arrangment plan (agreed with the creditor) an IVA or bankrupty in the last 6 years (even if 5 years and 6 months ago);

- You have never had credit within the past 6 years - you are likely to be declined if you've never had a credit card, a loan, a mortgage, an overdraft or a mobile phone contract in the past;

- Your credit history is not long enough - you may have a flawless history of payments on time and in full for 12 or 24 months - but depending on the credit card or the loan amount and term you apply for - this might not be enough history for lenders to come to a safe decision;

- Your existing debt (store cards, overdrafts, credit cards and loans) is near, or in excess of 50% of your salary;

- You have too much available credit (if you have £000's of available credit on other credit cards for example, then another credit card application may be declined because you could max out all the cards and then get yourself in a mess);

- You've applied for any form of credit more than 3 times in the last 6 months - this includes store cards, catalogues, acting as a guarantor, credit cards, loans and overdrafts;

- You are not on the electoral roll;

- You have not been at your address or your employment for long enough (credit granters prefer a couple of years, the better the card/deal the more stable you will need to be);

- You are not a profitable customer, you pay in full and in time every month and lenders are never able to levy you with any charges or interest;

- You are using too much of your available credit - if you have £8,000 in total credit card limits and you owe £6,900 - creditors may see you as risky because you are already exhausting your credit committments and now you want more;

- You simply do not meet the eligibility criteria - some lenders often specify minimum criteria such as being a homeowner, being over 21/25, earning over £20,000 and so on, but these are not always advertised (lenders are not under an obligation to detail every eligibility requirement used in their scoring methods);

- You have a record of fraud/CIFAS information on your credit report;

- You are financially connected (on your credit files) to someone who has negative items on their credit files (e.g. defaults, CCJs, Bankruptcy etc)

This is not an exhaustive list, and sometimes people who match the one of more of the above points are granted credit, even for the best cards. But as a rule, if you've been rejected then it is highly likely it is for one or more of the above reasons.

If this is not made a sticky, we could always provide a link to this thread for all queries that are relevant.

ES10

http://forums.moneysavingexpert.com/newreply.php?do=postreply&t=2989966

...or the cc provider claims that there's a fault with their systems - see my post above

...sorry but I'm not sure if the link is working

nzseries1

I'd be happy to see this made a sticky... but please change electoral role to electoral roll

izools

+1, Sticky. Thanks lee

Tixy

- You are financially connected (on your credit files) to someone who has negative items on their credit files (e.g. defaults, CCJs, Bankruptcy etc).

chanz4

A sign also newbie must read

lee1985

I have changed 'role' to 'roll' - oops!

Tixy - I have added yours to the list - thanks

If we can get enough people to support for this to be made a sticky then it would be great for MSE users, especially newbies.

Eonel

Are we sure that not being a profiitable customer because of never paying interest is a reason we should quote?

Banks obviously make money with each transaction, so paying interest isn't their only (main?) source of profitability.

Just a little concerned that we put out a message that people need to pay interest to improve their credit record, when this criteria may not be widely used by reputable banks.

izools

Indeed - that wouldn't be a valid reason - especially with products like Amex Platinum Cashback or Capital One World Mastercard who are specifically aimed at applicants who clear their bill in full each month.

That would mean using a cashback card the way it's designed to be used would have a detrimental effect on your credit score. Now that would be a breach of DPA so I'm sure that's not a reason; although I do believe a lot of creditors have an ideal "Customer Profile" which they try to match customers to, through the magic of neural-net risk analysis - but that's a whole 'nother conversation!

lee1985

It could be a reason. It comes from Martin's words to be honest, his credit scoring guide states clearly that banks want to make a profit from you (as one would expect) and if they don't think you are a profitable customer they may reject you. Yes, lenders do charge retailers for transactions but still, what Martin says I, personally, would believe to be honest.

Also, lenders do charge merchants yes but even with the greatest credit score there is still a risk to the lender of the cardholder defaulting. Therefore, are merchant charges alone enough to justify the risk of granting credit? Perhaps this is taken into account. Do lenders try to estimate the chance of interest being payable? We'll never know.

Pretty sure one or several of the other points would apply to a rejected applicant before this, however.

I'd say the idea of cashback cards is for people to simply spend on the card to make the retailer money via the merchants and interest where applicable. If enough people spend, whether it be once, twice or three times, then the lender makes money. There is also a chance people would leave balances on the card allowing interest to be charged - also adding to profitability. I wouldn't assume that a cardholder would pay off the balance in full every month and spend on the card again just to make cashback, though some may do that.

lee1985

Just bumping this for the newbies who ask about being rejected...