No debts, paying on time but get declined for Credit Cards

jumperabv3

I tried to read lots of articles online about this ... I kept on getting declined for new Credit Cards in the past 1 year and I have no debts, no defaults, no mortgages, but I do have several credit cards which I mainly use to earn miles with.

There is a new MBNA card that I really wanted to get but unfortunately I got declined and it's really disheartening.

I opened an account with Equifax to view my credit score - I had one loan declined from August (which I personally asked to decline), and I see I have too many unused accounts which I closed yesterday.

I was wondering if by closing unused accounts, and waiting 6 months should this improve my score? I used to have quite a good score but now it has been lowered to 369 (the lower mark of "Fair" in Equifax) and it shows that is caused mainly from:

• Current value of borrowing excluding mortgages £0 - it's marked in Grey (neutral?) - I am not sure why it shows £0 if I do spend a lot on my credit card? Is it because perhaps I repay the debt too fast - is that what's causing the problem?
• Credit agreements - 10 - marked in grey again - is it bad or good? Do I need more or less than 10 in order to improve it?
• Credit card utilisation - 0% - this one is marked in GREEN - meaning it's good.
• Months since last payment problem - 59 - marked in GREEN as well.
• Months since last serious payment problem - N/A - grey.
• Repayment Conduct assessment - OK - marked in ORANGE - how can I get it to be marked in Green so it would show GOOD and not only OK? In another words what am I doing wrong?

Also "Months since last recorded Credit search" shows 1 month as RED meaning it's bad - perhaps I tried to apply to too many credit cards recently?


Any idea / solutions / tips from people with the same experience?

HappyMJ

Always wait until the balance appears on a statement before paying a credit card or the credit reference agency report will show a zero balance and appear as if you aren't using the card.

10 credit agreements is quite a few I have more so I don't think that matters.

You shouldn't have a high credit card balance if you can avoid it but I do carry several thousand on 0% deals so not sure what's best here.

59 months since last payment problem is very good. 6 years - 72 months plus would be a perfect credit history.

I'd just keep using your cards waiting for the purchases to appear on a statement then pay that in full on the due date.

jumperabv3

HappyMJ wrote: »

Always wait until the balance appears on a statement before paying a credit card or the credit reference agency report will show a zero balance and appear as if you aren't using the card.

10 credit agreements is quite a few I have more so I don't think that matters.

You shouldn't have a high credit card balance if you can avoid it but I do carry several thousand on 0% deals so not sure what's best here.

59 months since last payment problem is very good. 6 years - 72 months plus would be a perfect credit history.

I'd just keep using your cards waiting for the purchases to appear on a statement then pay that in full on the due date.

First of all thanks for the advice, it's very helpful.

You said I should not "have a high credit card balance" if I can avoid it - so do you suggest to call the Credit Card companies I have cards with (currently only 3 are active: Halifax Clarity - 6000 GBP, British Airways AMEX - 9000 GBP and MBNA AAdvantage - 6500 GBP) - and ask them to reduce the credit limit?!

Do you think it would be better to reduce the limit now in order to "build" the credit score more efficiently or just keep it like that? I honestly don't need that huge limit, I just want the new MBNA card, I don't need anything else.

And lastly - if "59 months since last payment problem is very good" haha so why is my credit score so low - 369 - haha?

user1168934

I can see several possible reasons why you are getting declined but this is all just my opinion.
No mortgage
no debt, paying debt too fast, 0% utilisation - You are not profitable enough for CC companies.
10 credit agreements - not sure what you are including in these but these should all be green - why it is grey? any missed payments?
Applying too often is also an issue IMHO. Wait at least 3 months before making another application.

When it comes to credit cards having no debt is a big big negative. You need to have some debt and a history of paying it on time. Make minimum payments, carry some debt, pay a pound or two in interest every now and then before you clean the balance in full.

Are you on the electoral register? If not then get yourself listed.
How many credit cards do you currently have? How does the combined credit limit compare to your annual income? When combined limit is 50% or more of your income then it gets difficult to get more cards - just a rule of thumb.
It is always good to have some closed (settled) accounts on your credit history. Close unused accounts but do keep some accounts active.

jumperabv3

user1168934 wrote: »

How many credit cards do you currently have? How does the combined credit limit compare to your annual income? When combined limit is 50% or more of your income then it gets difficult to get more cards - just a rule of thumb.
It is always good to have some closed (settled) accounts on your credit history. Close unused accounts but do keep some accounts active.

I have 3 cards:

• Halifax Clarity - Credit Limit: 6000 GBP
• British Airways AMEX - Credit Limit: 9000 GBP
• MBNA AAdvantage - Credit Limit: 6500 GBP

I had 2 other unused Credit Card accounts (CapitalOne - 800 GBP and MBNA Virgin Atlantic - 1000 GBP) but I closed both of them yesterday so it probably would take time to show in the credit report etc. I assume.

Yes, altogether these 3 cards alone are reflecting about 50% of my annual income or even more than 50% - so do you think I should call these 3 companies and ask them to REDUCE my Credit Limit? Do you think it would help? For instance I honestly don't need 9000 GBP from British Airways AMEX, I think 2000 GBP would do - so do you think I should do that? Please let me know....

And what is the definition of "Active" accounts?
If I would spend let's say 300 GBP on each card and pay it after it has posted (which I haven't done until now and thanks to HappyMJ for the advice) - would that help to build credit?


I'm slightly confused .... :eek:

[Deleted User]

If you're not getting anywhere close to using your limit, then it could well be worth reducing one, as you are probably being delicined on affordability if your repayment history is good.

But don't focus on the score as that doesn't bear any relationship to whether a lender will accept you. You will probably, in all likelihood, see your score decline when you reduce the limits, but it will have no relevance.

ashp_2

The grey stuff is fine I have lots of grey and have an excellent rating. But you should close unused accounts.

What does your electoral role say?

You have had a payment problem and even though this is green it will have some impact on your "score" and possibly although unlikely your ability to gain credit.

As others said you are probably paying off your cards too quickly and obviously repeated searches will have quite a big impact on your ability to gain credit.

I'm unsure but your credit limits that are unused may be having a negative impact when a lender looks at your total available credit and your ability to pay all that back.

Candyapple

jumperabv3 wrote: »

I have 3 cards:

• Halifax Clarity - Credit Limit: 6000 GBP
• British Airways AMEX - Credit Limit: 9000 GBP
• MBNA AAdvantage - Credit Limit: 6500 GBP

I had 2 other unused Credit Card accounts (CapitalOne - 800 GBP and MBNA Virgin Atlantic - 1000 GBP) but I closed both of them yesterday so it probably would take time to show in the credit report etc. I assume.

You mentioned in your first post about having 10 credit agreements, if you have the 3 active cards above and closed 2 yesterday, what are the remaining 5? Credit cards? Loans? Overdrafts?

1. Do you have your bank account(s) showing on your credit files?
2. Any mobile phone providers?
3. Are you on the electoral roll?
4. How many applications for credit have you made over the last year?
5. List each card you have, what your limit is and what your outstanding balance is
6. Same as above but with overdrafts
7. Same as above but with loans
8. Have you obtained your credit file from CallCredit(Noddle) and Experian also?

If you always clear your credit card balance at the end of the month, rather than making manual payments, just set up a direct debit to take the full amount and that way it will register on your credit report that you are using the card(s).

Kristiannevan

Great Ideas!! But need to discuss something else.

jumperabv3

Deleted_User wrote: »

If you're not getting anywhere close to using your limit, then it could well be worth reducing one, as you are probably being delicined on affordability if your repayment history is good.

But don't focus on the score as that doesn't bear any relationship to whether a lender will accept you. You will probably, in all likelihood, see your score decline when you reduce the limits, but it will have no relevance.

Thanks for this advice ... can I ask if the credit score would go lower initially if I reduce the credit limit but after let's say 6-12 months it should go back up again if all is well?

And would you lower the limit on all of the 3 cards?

Thanks again.

user1168934

jumperabv3 wrote: »

.........so it probably would take time to show in the credit report etc.

You are absolutely correct. It will take around 2 months, try not to make any more applications during this time.

jumperabv3 wrote: »

I have 3 cards:
Yes, altogether these 3 cards alone are reflecting about 50% of my annual income or even more than 50% - so do you think I should call these 3 companies and ask them to REDUCE my Credit Limit? Do you think it would help?

No. I wouldn't do that. Reducing the credit limit will have an adverse effect on your credit history because when you will apply for another card shortly afterwards the lender will be able to see that your existing lender has reduced the limit and that will create a doubt on your credit wortiness. They will not know that it was indeed you who asked them to do it.
I think you will be better of closing your credit card instead of asking the provider to reduce your credit limit.
You made a good call closing the other two ununsed credit card accounts.

To clarify, 50% is a rule of thumb. For instance I have several credit cards with similar limits to yours and the total limit was just over my 50%. I applied for an HSBC card last week, which is considered by most as a very difficult card to get, and it was approved with £6000 limit.

jumperabv3 wrote: »

I have 3 cards:
And what is the definition of "Active" accounts?
If I would spend let's say 300 GBP on each card and pay it after it has posted (which I haven't done until now and thanks to HappyMJ for the advice) - would that help to build credit?

An active account is the one where you make a payment month on month. As advised make the payments only when the statement has been issued and not before. It will most certainly help your credit history.


Also try to space things out .... what I mean by that is that all of a sudden you are now closing several credit cards .... next time plan for it .... close one, give it a couple of month to settle down, close another, apply for a card and then close the one you are not using .... etc etc.

Hope this helps.