Rejected by Barclays due to use of overdraft - Apply for Another?

TimeToBawl

Hi all,

First post here. Basically I applied to Barclays yesterday for their 0% 27 month balance transfer and purchase card and was rejected. I wasn't given an exact reason but a list of 3 potential reasons came up underneath, one of them being "you are frequently in or exceeding your overdraft", which seemed to be the only one that may have been possible given that I've never been late/missed a payment before.

I have had a student account with santander with a 2k interest free overdraft, which has changed to a graduate account with the same overdraft, I am currently at a balance of about -1.3k. I have been within my overdraft many times and frequently, but I have never exceeded the amount offered and have never incurred any charges.

My current situation is that I am transfering £200 from this account every month into a help-to-buy ISA, which I want to max out as quickly as possible.

Given this relatively large amount of money coming out my account each month, I was after a credit card which would help provide some quick cash for a couple of large purchases I wish to make before my first paycheck comes in at the end of August (I have just graduated and this is my first job).

My questions are as follows and if anyone would be able to help it would be greatly appreciated.

Does overdraft use affect credit score? I have had a look at my credit file using clearscore and it doesn't mention anything there, although my score isn't great - even though I've had utility contracts and have never been late for a payment (maybe I don't have enough of them)

Does overdraft use affect all credit card applications? I am considering applying for another card as I did not secure the Barclays one.

Why do eligibility checkers not tell you that overdraft use may impact your application? I'm very frustrated that when I used eligibility checkers I was told that I had a 9/10 chance of obtaining the Barclays card, and was declined based on a factor that wasn't mentioned anywhere.

How reliable is MBNA's "clever checker"? I have been approved with a soft check from them for a similar card with 15-months 0% and want to obtain it (and they did ask for my account details - so may have checked my overdraft? I'm not sure what they use it for), but I am very worried after having already received a rejection from Barclays when I had passed their eligibility checker.

If I apply for another card today, given that I applied for one yesterday and was rejected, how heavily with that affect my credit score? Will it be worse if I'm declined again? Or is it just a hard check that makes the difference and not whether you're approved/rejected.

If I apply again and this impacts my credit score, how long will it take to recover?

Any help would be greatly appreciated as the transparency surrounding credit scores/cards is a bit ridiculous and frustrating. I understand that there are cards out there that are useful for rebuilding credit, but I am currently after a card with a decently long 0% interest period on purchases, and a decent credit limit as I would like to make a couple of large purchases soon.

Thanks

Willing2Learn

Hi TimeToBawl and welcome to the forum

Using an overdraft can be viewed by lenders as living beyond your means. Therefore, it could indicate a higher risk.

[Deleted User]

Your "score" isn't affected by anything since it's not a factor used in lending.

Using your overdraft every months means that you cannot get by with your regular income and need to rely on an overdraft being there, which will flag red for many lenders.

£200 isn't even a relatively large sum of money, as you put it.

You can try another lender, but, how are you expecting to pay back the credit card each month?

TimeToBawl

Thanks a lot for both your replies.

Gary, £200 is a relatively large amount of money given that I currently have no income, and for the past 6 years have only had student loans and bursaries, meaning I have never had more than £2,000 in my account at any given time, and am currently only 3 £200 payments away from exceeding my overdraft.

The using my overdraft is because I have been putting money into an ISA each month, so that I don't have it sitting in a checking account gathering dust, or even worse - being tempted to spend it.

I understand that may appear as though I am living beyond my means, and it's really useful to know that credit lenders can see and judge this so thank you, but I am not really. I am simply reallocating money to another area where it is safer and more useful to do so.

If another lender does approve me, I will be able to pay back the outstanding balance within a few months - as I am now employed an will be earning roughly £2.2k a month post tax. I also have virtually 0 outgoings aside from the large purchases I wish to make. It would only take me about 2-3 months to clear both the outstanding credit balance and my overdraft. Which is why I wanted a card which offers 0% on purchases for a few months (as long as possible for peace of mind). This is why I'm keen to know if another lender WILL approve me.


I recently opened a NatWest account (it's only about a week old). If I were to put this in the credit card applications as my bank account (rather than my Santander graduate account), would the lack of use of an overdraft on this account be a positive factor on my application? Or would the account be too new for it to offer the lenders any information?

[Deleted User]

They'll see all your accounts on your credit files - you can't choose which account they do and don't view when making lending decisions.

The entering of the account number and sort-code on the application is just to confirm that you have a UK account, it can be used for Direct Debits and as part of the identity checks.

It's not used as a delegate account to check overdraft limits etc. on

TimeToBawl

Ahhh damn it OK that makes sense. Bit of an unfortunate situation. Any advice re: this?

If I apply for another card today, given that I applied for one yesterday and was rejected, how heavily with that affect my credit score? Will it be worse if I'm declined again? Or is it just a hard check that makes the difference and not whether you're approved/rejected.

MEM62

TimeToBawl wrote: »

My current situation is that I am transfering £200 from this account every month into a help-to-buy ISA, which I want to max out as quickly as possible.

In effect you are borrowing to fund your ISA. This makes little sense. Clear your debts first.

Also, a potential lender will see regular OD use as cash-flow or money management issues.

Willing2Learn

TimeToBawl wrote: »

If I apply for another card today, given that I applied for one yesterday and was rejected, how heavily with that affect my credit score? Will it be worse if I'm declined again? Or is it just a hard check that makes the difference and not whether you're approved/rejected.

Don't worry about your score as lenders neither use it nor see it. Lenders only see the raw DATA held in your credit file. A credit search is an example of such data. Too many credit searches over a short period could indicate desperation and higher risk.

Personally, I would make the second application...as two or three credit applications is not so bad...

[Deleted User]

TimeToBawl wrote: »

Ahhh damn it OK that makes sense. Bit of an unfortunate situation. Any advice re: this?

If I apply for another card today, given that I applied for one yesterday and was rejected, how heavily with that affect my credit score? Will it be worse if I'm declined again? Or is it just a hard check that makes the difference and not whether you're approved/rejected.

Really, I would hold off funding the ISA until that OD is bought back up to zero and then keep it there.
Then look to start funding your ISA again.

Apply for another card but use an eligibility checker first and maybe go for one aimed at people with bad/low credit history - Aqua, Vanquis, Capital One etc.

If your bank offers a CC then try with them as well maybe.

Ignore any references to your credit score and rating as it's not a real thing used in lending decisions.

TimeToBawl

Willing2Learn wrote: »

Don't worry about your score as lenders neither use it nor see it. Lenders only see the raw DATA held in your credit file. A credit search is an example of such data. Too many credit searches over a short period could indicate desperation and higher risk.

Personally, I would make the second application...as two or three credit applications is not so bad...

Thanks a lot. I guess perhaps I could rephrase. Putting my score aside, how many applications over what sort of period of time would indicate potential desperation, and how long "application free" would I have to be in order for this desperate look to fade and not affect my chances of securing further credit down the line, say another card, or a mortgage.

[Deleted User]

2 or 3 within a 6 month period is OK - it can vary by lender as to how much they look at previous searches as being "desperation".

Don't forget if you've recently opened a current account there will also be a search for that too.