Refused Credit Twice, What Should I Look For?

Thrugelmir

MoneySaverLog wrote: »

That in a perverse way could be the problem. A new creditor comes along and sees that the limit has been lowered, and they wonder why that would be the case. They don't know you lowered it, and not the creditor for some reason.

Lenders also view utilisation of available credit lines. So removal of unused shouldn't be an issue.

Different situation where a credit facility is being managed down over a period of time with the reducing limit being used to control the balance.

sfax

Thrugelmir wrote: »

Lenders also view utilisation of available credit lines. So removal of unused shouldn't be an issue.

I disagree for two reasons:

1. You increase your credit utilisation
2. You present a snapshot where the lender may think that the current limit is all someone else was willing to offer you. Low limits suggest a risky customer

sfax

The only time I would decrease a limit on a card is when it would have no material effect on utilisation and when it would potentially facilitate a slightly higher limit on a new card because total credit available against income is too high

sfax

simplydevine05 wrote: »

You have too much available credit so need to get rid of a card or two.

This isn't true. The OP has declared income of £78k. His available credit could easily be three times what it is now without presenting any problems. Mine is about 30% of declared income and has been 50% fairly recently

Thrugelmir

sfax wrote: »

Low limits suggest a risky customer

Explain the logic of that statement to me.

sfax

Thrugelmir wrote: »

Explain the logic of that statement to me.

I am a lender. I lend money. A customer wants money. He seems very responsible and trustworthy and I can see he always pays money back on time. I am happy to lend him up to £5,000. Along comes another customer. He has no credit history and doesn't seem as trustworthy. I'll lend him £500 max because of the extra risk of default.

There's your logic

sfax

In fact, you can see a real life example in this very thread. Which card above has the lowest limit? The Aqua, sub prime card

DJBenson

Herein lies the problem - because calculating credit worthiness is such a black art, it is very difficult for the customer (i.e. me) to understand what it is about my profile that makes them think "hey, that person, with an income over £70k, who pays his bills on time every month and has no defaults is a risk"

The whole Aqua/sub-prime argument has been touted time and again and I don't believe the fact that I have a so-called sub-prime card (which is in fact was one of the best cashback cards of last year) is a factor. The card was issued by one of the mainstream lenders (Halifax?) and shows on my credit history as a check by them and not a big red flag that says "sub-prime credit user". Yes, it has a low credit limit, so that could be the red-flag, but I've had that card for >12 months and had other applications accepted in the meantime.

leeroy2009

I believe the high apr on that card suggests its sub prime.

DJBenson

At the risk of sounding like I'm spitting my dummy out - with sites like MSE really pushing credit cards that offer cashback, whether the card is "sub-prime" or not should not be an indicator of risk. I have several other "premium" products (gold/platinum) and in the grand scheme of things, whether I have the Aqua card or not should be largely irrelevant.

I am not going to find an answer as to why I've been rejected, and as I'm in a good place financially, I'm not too bothered, but I do resent being told "no" with no clear indication as to why. If it's not down to fraud (where I can appreciate the need to keep the reasons quiet) then it's not beyond the realms of reason for a lender to say "hey Mr X, we can see you've made a load of applications recently so for now we are politely declining your custom". Easy.

Guess it's the same thing as when you don't get a job and they don't tell you why - we live in such a litigious society that they are probably cacking themselves at being sued or something