I’ve got a good credit score, but my credit card and loan affordability is weak, please advise?

Chris_derby

Hi,

I posted a similar post in credit cards earlier about me buying a campervan and paying for it by part by 0% credit card.

I applied for the M&S Bank credit card (0% interest for 20 months) but was only given a £2,000 limit. So I’m looking to apply for another 0% credit card. Just had a look at my credit file, my credit score is high, but my credit card & loan affordability is weak for some reason.

Why would this be? I have substantial savings in ISA’s (but I can’t see these anywhere on my report). It also says all my bank account balances for current accounts are £0.

If anyone can enlighten me why this is, or a way to increase my affordability it would be very much appreciated.

Thanks.

MovingForwards

Ignore the credit score and rating as it's not seen or used by any UK financial institution it's the credit history they see and use eg late missed payments defaults CCJs IVA bankruptcy etc.

CRAs do not lend money, their eligibility checker are based on people with similar profiles to you. The only way you will know if you can get any credit is by going directly to a financial institution and using their eligibility checker.

Savings accounts do not show on CRAs as they are not credit accounts.

Current accounts show and have £0 balance unless an overdraft is on the account.

Highly doubtful you will get a CC with £10k limit straight off as it sounds like you have a 'thin' CRA eg not taken out any / much credit over the last 6 years or you have had previous credit issues, relied on saving to make purchases and not applied for credit until recently.

Oh, also C19 is causing a lot of lenders to tighten their belts and criteria.

Have you tried your own bank for a CC? 

D3xt3r5L4b

What you see for your rating and score is a best guess based on nonsensical algorithms.

How much do you need for the campervan?
Does the seller take credit card as a payment option?

If you have “substantial savings” why not use those?

dr_adidas01

The magic made up number you see means diddly squat as no lender ever uses it, each lender has there own internal score method that they use to score you against and make a decision.

Perhaps you need to read the sticky at the top of this forum that tells you what your credit score really means.

https://forums.moneysavingexpert.com/discussion/4974939/what-your-credit-score-really-means/p1 

Also your savings accounts and ISA are not reported to to the CRA's and will make little difference to lends at all.  If you have substantial savings why not use that to pay for the campervan?

PRAISETHESUN

This is basically the same as your other thread: https://forums.moneysavingexpert.com/discussion/6181064/given-a-low-limit-on-credit-should-i-apply-for-another-one#latest

As I mentioned there previously, only credit accounts get reported on your files. Current accounts get reported for how you manage their respective overdrafts, if they are unused (ie. because you have a positive balance) then a £0 balance is reported (similar to not spending on your CC in a given month) - this looks good to lenders. Savings such as ISAs are not credit and hence are not reported.

The only real ways to improve affordability are to either obtain more money, or reduce your exposure to credit.

Chris_derby

MovingForwards said:

Ignore the credit score and rating as it's not seen or used by any UK financial institution it's the credit history they see and use eg late missed payments defaults CCJs IVA bankruptcy etc.

CRAs do not lend money, their eligibility checker are based on people with similar profiles to you. The only way you will know if you can get any credit is by going directly to a financial institution and using their eligibility checker.

Savings accounts do not show on CRAs as they are not credit accounts.

Current accounts show and have £0 balance unless an overdraft is on the account.

Highly doubtful you will get a CC with £10k limit straight off as it sounds like you have a 'thin' CRA eg not taken out any / much credit over the last 6 years or you have had previous credit issues, relied on saving to make purchases and not applied for credit until recently.

Oh, also C19 is causing a lot of lenders to tighten their belts and criteria.

Have you tried your own bank for a CC? 

Thanks for the reply. I’ve learnt something there, and worth not paying too much attention to my credit score. Although like you say, COVID-19 may be having a knock on affect for how much people are lending.

I have taken quite abit of credit out in the past, I used interest free credit cards to pay for my wedding and always paid them off on time before the interest free period was up. My highest limit previously was £12,000 and got that straight way.

Not tried my own bank yet, they do offer a 0% credit card also so could try them next.

Chris_derby

D3xt3r5L4b said:

What you see for your rating and score is a best guess based on nonsensical algorithms.

How much do you need for the campervan?
Does the seller take credit card as a payment option?

If you have “substantial savings” why not use those?

Thanks for your reply and yes looks like credit scores mean nothing!

I would have like a credit with £10,000, my wife has one for £9,000 and was going to put cash towards it as well. Wanted to flexibility of paying over a longer period, didn’t want to wipe out all of my savings and 0% credit cards do this nicely. When I say substantial, I probably mean just enough to buy the campervan.

Chris_derby

dr_adidas01 said:

The magic made up number you see means diddly squat as no lender ever uses it, each lender has there own internal score method that they use to score you against and make a decision.

Perhaps you need to read the sticky at the top of this forum that tells you what your credit score really means.

https://forums.moneysavingexpert.com/discussion/4974939/what-your-credit-score-really-means/p1 

Also your savings accounts and ISA are not reported to to the CRA's and will make little difference to lends at all.  If you have substantial savings why not use that to pay for the campervan?

Also thanks for your reply and If I’ve learnt anything today it appears credit scores are nonsense.

When I say substantial, I probably mean just enough to buy the campervan but I wanted the flexibility to pay for the campervan over a longer period, and keep the savings for emergencies I guess.

D3xt3r5L4b

Chris_derby said:

D3xt3r5L4b said:

What you see for your rating and score is a best guess based on nonsensical algorithms.

How much do you need for the campervan?
Does the seller take credit card as a payment option?

If you have “substantial savings” why not use those?

Thanks for your reply and yes looks like credit scores mean nothing!

I would have like a credit with £10,000, my wife has one for £9,000 and was going to put cash towards it as well. Wanted to flexibility of paying over a longer period, didn’t want to wipe out all of my savings and 0% credit cards do this nicely. When I say substantial, I probably mean just enough to buy the campervan.

MBNA give you an idea on what you're limit could be when applying, as do Halifax, Lloyds and Nationwide.
Whilst £10k credit isn't unheard of, given the current climate as well, what are you current debts/income/limits on existing cards etc.?

PixelPound

Chris_derby said:

D3xt3r5L4b said:

What you see for your rating and score is a best guess based on nonsensical algorithms.

How much do you need for the campervan?
Does the seller take credit card as a payment option?

If you have “substantial savings” why not use those?

Thanks for your reply and yes looks like credit scores mean nothing!

I would have like a credit with £10,000, my wife has one for £9,000 and was going to put cash towards it as well. Wanted to flexibility of paying over a longer period, didn’t want to wipe out all of my savings and 0% credit cards do this nicely. When I say substantial, I probably mean just enough to buy the campervan.

So you got an M&S card, was the 0% period for the full time they were offering - if so then it's not your "credit rating" but affordability. You don't say what your annual income is and the disposable element of it. Are you on £30K, £40K pa?

Also different lenders have different affordability criteria - some will give you higher limits than others. Re your wife you don't say who the card is with or whether she got £9K initially or they've increased the limit since. 

If you've applied for the M&S be mindful of when you apply again as it may make you look desperate for money (he's applied for an M&S so why does he need another card so soon?).  

Chris_derby

D3xt3r5L4b said:

Chris_derby said:

D3xt3r5L4b said:

What you see for your rating and score is a best guess based on nonsensical algorithms.

How much do you need for the campervan?
Does the seller take credit card as a payment option?

If you have “substantial savings” why not use those?

Thanks for your reply and yes looks like credit scores mean nothing!

I would have like a credit with £10,000, my wife has one for £9,000 and was going to put cash towards it as well. Wanted to flexibility of paying over a longer period, didn’t want to wipe out all of my savings and 0% credit cards do this nicely. When I say substantial, I probably mean just enough to buy the campervan.

MBNA give you an idea on what you're limit could be when applying, as do Halifax, Lloyds and Nationwide.
Whilst £10k credit isn't unheard of, given the current climate as well, what are you current debts/income/limits on existing cards etc.?

I’ve currently got a £9000, £5000 credit cards open, the £9000 has got about £700 to pay and the £5000 is cleared. I also had a £12000 card which is now closed, although I can still see this in my credit file.

Thanks for that, I’ll have a look at those providers to see if they will give me an inkling or how much they will lend me.