I got declined but don't know why

richk77

A few days ago I tried to get a new mobile.  Nothing fancy, just a reconditioned iPhone from Giffgaff that would cost me £10 a month over a couple of years.  I had to go through a credit check, and when I put in my details, I was declined.  I'm a little confused by this.  It's the first time in years I've tried to do anything on credit, but my score is 990.  I've paid for the Experian CreditExpert service, but it had nothing but positive news.  I have no defaults.  I've lived here for eight years and the mortgage is up-to-date. I have a well-paid job and have been in the post for over two years.  I have a single credit card with a balance of £800.  All of my utilities are up-to-date.

Thanks to a failed business some years ago both my wife and I had defaults on our credit files, but mine are all long gone.  My wife has one remaining, thanks to a dispute with Vodafone, and I wonder, could this be the problem?  We don't have a joint account and the mortgage is in my name alone, plus, Experian doesn't show me as linked financially to anyone.

I'm not that concerned about the phone.  I can just buy a refurb from Amazon, but we are considering some other stuff that will require credit.  We're considering some home improvements and we need to replace one of our cars before too long, and I'm worried I'm just going to get declined for everything.

Is it the link to my wife that's the problem, or something else?

MorningcoffeeIV

Limited credit history and carrying a balance on your sole credit card are the likely reason.

With a thin file, your high credit score is Experian shorthand for high risk.

Remember to check your other files to see if anything else negative appears.

macman

Remember, it's not the £10 per month that the lender is concerned about. It's the potential exposure to losses that the airtime contract allows, which could be thousands in the event of theft or fraud.
Your credit score is a fictitious figure that lenders can't even see, so ignore it.

asingledad

Are you sure Grifgraff use Experian?

It is probably worth checking your credit reports with Equifax and Transunion. I use Clear Score and Credit Karma (both free) for those (and MSE Credit Club for Experian).

As others have said, being declined one thing does not mean you will be declined for others. Lenders use in-house systems, not your score. Some systems are complex, and increasingly machine learning based, so even the lender may not know exactly why they declined you.

The score is a guess by the CRA of your general creditworthiness. It does not tell you what a particular lender will decide about a particular product. It is definitely possible that you will be turned down for the phone but be able to buy a car on credit so do not worry yet.

What is your credit card limit? High utilisation can count against you, as can paying the balance in full every month.

CliveOfIndia

asingledad said:

 High utilisation can count against you, as can paying the balance in full every month.

Wrong on both counts there, I'm afraid.  High utilisation is only an issue if you're carrying a balance from month to month, it's of no significance at all if you're paying the full balance every month (as you should be) - despite what the CRAs would like you to believe.

And paying the balance in full every month most definitely doesn't count against you, quite the opposite in fact.  I'm not sure where you heard that gem?  You absolutely should be paying the full balance every month, both in terms of building up a solid credit history and in terms of not paying any interest.

asingledad

High utilisation is only an issue if you're carrying a balance from month to month

CliveOfIndia said:

High utilisation is only an issue if you're carrying a balance from month to month,

True, that is what I meant - it was worded badly.

Its quite hard to have high utilisation without carrying a balance from month to month unless your credit limit is low relative to your income.

I like having a high limit, even if I do not mean to use it, because it might be useful in an emergency.

CliveOfIndia said:

You absolutely should be paying the full balance every month, both in terms of building up a solid credit history and in terms of not paying any interest.

In terms of not paying interest, you should not pay off any zero percent debt. Given current levels of inflation I would not pay off low interest debt either.

In terms of impact on credit, it makes you a less (maybe unprofitable) customer for other credit cards. I would be astonished if their systems did not take this into account.

Secondly, it does show you can run up and pay down debt. Again, I would be astonished if no bank's systems took this onto account. It would highly unlikely to  be worth the extra interest you would if you do this deliberately (because it would be one factor among many) but its likely to have some effect.

born_again

richk77 said:

A few days ago I tried to get a new mobile.  Nothing fancy, just a reconditioned iPhone from Giffgaff that would cost me £10 a month over a couple of years.  I had to go through a credit check, and when I put in my details, I was declined.  I'm a little confused by this.  It's the first time in years I've tried to do anything on credit, but my score is 990.  I've paid for the Experian CreditExpert service, but it had nothing but positive news.  I have no defaults.  I've lived here for eight years and the mortgage is up-to-date. I have a well-paid job and have been in the post for over two years.  I have a single credit card with a balance of £800.  All of my utilities are up-to-date.

Thanks to a failed business some years ago both my wife and I had defaults on our credit files, but mine are all long gone.  My wife has one remaining, thanks to a dispute with Vodafone, and I wonder, could this be the problem?  We don't have a joint account and the mortgage is in my name alone, plus, Experian doesn't show me as linked financially to anyone.

I'm not that concerned about the phone.  I can just buy a refurb from Amazon, but we are considering some other stuff that will require credit.  We're considering some home improvements and we need to replace one of our cars before too long, and I'm worried I'm just going to get declined for everything.

Is it the link to my wife that's the problem, or something else?

Companies do not see this number.
& with Experian & their "Boost your score" makes it even more pointless.

Clearly there is something else that is causing the issue.

So check all the CRA & see if there is anything on them that is causing the issue.

This is assuming that you are on the electoral role at your address.

CliveOfIndia

asingledad said:

Its quite hard to have high utilisation without carrying a balance from month to month unless your credit limit is low relative to your income.

Not really.  If you have a card with a limit of £6000 and you regularly spend £5000 on it every month then that could be viewed as "high utilisation". But it's no problem at all if you're repaying the full amount every month.  It's only if you are carrying a balance from month to month that it becomes an issue - the inference being that you're borrowing more than you can afford to repay.

asingledad said:

In terms of not paying interest, you should not pay off any zero percent debt.

Quite correct - there's little point in repaying a 0% promotion card in full, until the promotion is about to expire.

asingledad said:

Given current levels of inflation I would not pay off low interest debt either.

That's a fair debate - if you have savings which are earning more interest than what you're paying on your debt, then absolutely it would make sense to pay the minimum on your debt and keep your savings in place.

asingledad said:

In terms of impact on credit, it makes you a less (maybe unprofitable) customer for other credit cards. I would be astonished if their systems did not take this into account.

Secondly, it does show you can run up and pay down debt. Again, I would be astonished if no bank's systems took this onto account. It would highly unlikely to  be worth the extra interest you would if you do this deliberately (because it would be one factor among many) but its likely to have some effect.

This is a common misconception.  Yes, of course it's true that card companies make money out of you from the interest they charge.  However, even if you repay in full each month and pay no interest, they still make plenty of money out of you indirectly from the fees they charge the retailer on every transaction you make.  And if you're always paying in full, it means they've got a nice steady income stream with none of the hassle or expense of having to chase potentially bad debt.

Indeed, there's an argument to say that a person who regularly spends many thousands every month on their card but always pays in full is an ideal customer - loads of merchant fee revenue for the card company with zero hassle.  Not that anyone should be spending just for the sake of it, of course!

I hope this doesn't come across as argumentative - just trying to lay to rest some very common misconceptions.