Disposable incoming assessed as low, but it isnt!

JimLad

Hi Gang,

Just got declined for a credit card which surprised me so i went on the credit club on here. Everything is 999 / fully green except Disposable income which is rated as red / very weak.

How do they calculate this? 2 kids (one in school one nursery) I put 1k a month into our joint account to pay bills but thats basically the only outgoing i have! We have no mortgage and between me and my wife we take home approx 5k a month approx 50/50. The only debt we have is 450pm going to a loan which has about a year left to run...

Whats going on!?

Ebe_Scrooge

The score you see on your CRA report is utterly meaningless - it's not used, nor even seen, by any lender.  Likewise, the "disposable income" is just the CRA's view of you - but since they aren't the ones lending you money, it matters not one jot what they think of you.

A lender will look at the raw data contained within your files, churn it through their systems, and based on the outcome will decide whether or not to lend to you.

Check the data in all 3 of your files.  Make sure that all the data are factually correct.  Are there any negative markers such as defaults, late payments, things like that?  Is your address showing correctly?  Are you registered as being on the Electoral Roll?

If you have a very thin credit file (i.e. not much historical data for a prospective lender to analyse), this can be a downside in its own right.

Ultimately you will never know why a lender declines you - their lending criteria are confidential and commercially sensitive.  Check the data in all 3 of your credit files, but in the absence of any red flags, try applying for one of the sub-prime cards.  After a year or so of responsible usage, your credit history should improve somewhat and you can then look to apply for a more mainstream card if you wish.

JimLad

Ebe_Scrooge said:

The score you see on your CRA report is utterly meaningless - it's not used, nor even seen, by any lender.  Likewise, the "disposable income" is just the CRA's view of you - but since they aren't the ones lending you money, it matters not one jot what they think of you.

A lender will look at the raw data contained within your files, churn it through their systems, and based on the outcome will decide whether or not to lend to you.

Check the data in all 3 of your files.  Make sure that all the data are factually correct.  Are there any negative markers such as defaults, late payments, things like that?  Is your address showing correctly?  Are you registered as being on the Electoral Roll?

If you have a very thin credit file (i.e. not much historical data for a prospective lender to analyse), this can be a downside in its own right.

Ultimately you will never know why a lender declines you - their lending criteria are confidential and commercially sensitive.  Check the data in all 3 of your credit files, but in the absence of any red flags, try applying for one of the sub-prime cards.  After a year or so of responsible usage, your credit history should improve somewhat and you can then look to apply for a more mainstream card if you wish.

Up until last month i had an Amazon card which i used for all spending and paid off in full every month. This has now been closed as newday stopped offering it

Everything has come back green on equifax too!

[Deleted User]

Lenders can be picky but it seems odd that if you are earning 2.5k a month you were declined. Try an application again for someone else and double check when you apply that you put your annual salary in properly, in full and your debt figures correctly - 1k a month into an account for bills is vague - be more specific. If you are on a take home of 2.5k after tax and put in say £36k income and £450 a month on the debt, I don't see why you wouldn't get credit. Do you have a financial association with your wife (likely if it's a joint account rather than savings)? If so, are you sure her account is squeaky clean too? Have you checked?

If no joy wait a few months and then apply for a card with a credit builder firm like capital one or vanquis, run it for a year or so, paying in full every month and then apply for a prime one.  

diystarter7

We tried to increase our cc limit on a Barclaycard - we had one for years and started using another two with cc limits on avg around 8k.  We wanted to use one cc only and have been with barcalys for well over 3o years and hold premier debit cards.

The funny thing they refused the doubling of our credit limit but on Wed got a letter to our surprise that they will and looking at "final checks" or something like that. The funny thing I rang them and they said they cant tell why the increase was declined but the lady agreed to email the cc dept - possibly it is that.

we have never had anything on credit where we pay interest other than a couple of mortgages all paid off years ago, so it could be lack of paying them interest and not worth their while is what I felt at the time.

CC lenders are aware re everything going up and taking some responsibility - which is good but for people like you and us, it works against us. IMHO

Ebe_Scrooge

diystarter7 said:

The funny thing I rang them and they said they cant tell why the increase was declined

No lender will tell you why you are declined.  As has been stated many times on here, a lender's internal scoring criteria are confidential and commercially sensitive.  If they told you why you were declined then you could simply "play the system" on your next application and tweak your application to tell them what they wanted to hear.

diystarter7 said:

we have never had anything on credit where we pay interest ... so it could be lack of paying them interest and not worth their while

This is another widely-circulated myth.  A credit card company makes plenty of money from you indirectly, in the form of fees they charge the retailer every time you make a purchase.  Sure, if you pay them interest as well then that's an added bonus for them.  But the customer who uses their card regularly, always pays on time and generates a nice steady income stream of merchant fees will do very nicely, thank you very much.  They get a nice steady income, with none of the expense or hassle of having to chase people who are late paying, or who default completely.

Kind of like if I said to you, "Would you like me to give to £100 a month guaranteed, no questions asked.  Or would you prefer me to say I might give you £500 a month, but you may or may not actually get it?".

FindMyWayBack

something seriously wrong with the disposable income part of the MSE credit report thingy, it's been like that for years. That and the score don't matter though, what matters is your actual report.