Repeatedly rejected for credit with high credit score

[Deleted User]

Nasqueron said:

Mark_d said:

A good credit score means you can be trusted with credit.  But do you have enough disposable income to support an additional credit facility?  If you always pay your balance in full, then credit card companies don't make money out of you.  Worth bearing in mind

Credit card companies typically make 30-40% of their income (this was data for the US but I imagine it's the same here) from the processing fees, interchange rates etc. They certainly make the bulk of their income from fees and interest but a well managed card still gives them plenty of revenue.

Regardless, the credit card companies are not relevant here, the OP's credit history is all that matters and the finance companies have rejected the application based on that, not the fictional score

This is simply inaccurate

• UK interchange fees are capped massively lower than the USA at EU levels 0.3%,
• If points or other rewards are paid then that eats up most of the interchange fee
• Penalty type charges have been minimised unlike the USA 
• A decent amount don't use the card abroad if it has a currency loading
• Issuer has to fund S75 claims; in the USA only chargeback is available
• Fraud, FOS fees and bad debt costs add up
• Card issuing & servicing costs add up

Many cardholders who pay in full, will be barely making the card issuer any profit and if they have fraud/make a FOS complaint or S75 claim then their relationship will be almost certainly loss making. 

   

Nasqueron

[Deleted User] said:

Nasqueron said:

Mark_d said:

A good credit score means you can be trusted with credit.  But do you have enough disposable income to support an additional credit facility?  If you always pay your balance in full, then credit card companies don't make money out of you.  Worth bearing in mind

Credit card companies typically make 30-40% of their income (this was data for the US but I imagine it's the same here) from the processing fees, interchange rates etc. They certainly make the bulk of their income from fees and interest but a well managed card still gives them plenty of revenue.

Regardless, the credit card companies are not relevant here, the OP's credit history is all that matters and the finance companies have rejected the application based on that, not the fictional score

This is simply inaccurate

• UK interchange fees are capped massively lower than the USA at EU levels 0.3%,
• If points or other rewards are paid then that eats up most of the interchange fee
• Penalty type charges have been minimised unlike the USA 
• A decent amount don't use the card abroad if it has a currency loading
• Issuer has to fund S75 claims; in the USA only chargeback is available
• Fraud, FOS fees and bad debt costs add up
• Card issuing & servicing costs add up

Many cardholders who pay in full, will be barely making the card issuer any profit and if they have fraud/make a FOS complaint or S75 claim then their relationship will be almost certainly loss making. 

   

You're taking general possible issues and applying them to all credit card owners, this is simply inaccurate.

If I have a card and pay on it every month and pay in full every month where do any of the fraud/fos/bad debts/card issuing/penalty charges etc come in? They don't. A card I use earns them money because none of those apply to me - you can't use the costs related to people who don't pay cards off in full every month and apply them to people who do. It's not a valid comparison to only list negatives and ignore other things like card membership fees, merchant fees (around 1.75% in the UK) etc

Grumpy_chap

pth123 said:

Hi - I wonder if anyone can help me. I’ve been rejected for credit by two companies (Apple and John Lewis) to get an iPhone on finance. The first one was a soft check so didn’t impact my credit score, so the second wasn’t to do with the first. 

Just to be clear, is this credit to buy the phone outright, or credit for a phone contract that includes the phone plus airtime?

As others have said, the credit score is irrelevant but the details on your credit history can influence the decision. 

pth123

Grumpy_chap said:

pth123 said:

Hi - I wonder if anyone can help me. I’ve been rejected for credit by two companies (Apple and John Lewis) to get an iPhone on finance. The first one was a soft check so didn’t impact my credit score, so the second wasn’t to do with the first. 

Just to be clear, is this credit to buy the phone outright, or credit for a phone contract that includes the phone plus airtime?

As others have said, the credit score is irrelevant but the details on your credit history can influence the decision. 

Thanks for getting back to me. This is to buy a phone on finance outright, so no airtime. 

I’m just trying to decipher what it could be in my credit history that could have negatively influenced the decision. I’ve never defaulted on a payment in my life. 

Hoenir

Why not buy the phone outright by using one of your credit cards ? 

[Deleted User]

Nasqueron said:

[Deleted User] said:

Nasqueron said:

Mark_d said:

A good credit score means you can be trusted with credit.  But do you have enough disposable income to support an additional credit facility?  If you always pay your balance in full, then credit card companies don't make money out of you.  Worth bearing in mind

Credit card companies typically make 30-40% of their income (this was data for the US but I imagine it's the same here) from the processing fees, interchange rates etc. They certainly make the bulk of their income from fees and interest but a well managed card still gives them plenty of revenue.

Regardless, the credit card companies are not relevant here, the OP's credit history is all that matters and the finance companies have rejected the application based on that, not the fictional score

This is simply inaccurate

• UK interchange fees are capped massively lower than the USA at EU levels 0.3%,
• If points or other rewards are paid then that eats up most of the interchange fee
• Penalty type charges have been minimised unlike the USA 
• A decent amount don't use the card abroad if it has a currency loading
• Issuer has to fund S75 claims; in the USA only chargeback is available
• Fraud, FOS fees and bad debt costs add up
• Card issuing & servicing costs add up

Many cardholders who pay in full, will be barely making the card issuer any profit and if they have fraud/make a FOS complaint or S75 claim then their relationship will be almost certainly loss making. 

   

You're taking general possible issues and applying them to all credit card owners, this is simply inaccurate.

If I have a card and pay on it every month and pay in full every month where do any of the fraud/fos/bad debts/card issuing/penalty charges etc come in? They don't. A card I use earns them money because none of those apply to me - you can't use the costs related to people who don't pay cards off in full every month and apply them to people who do. It's not a valid comparison to only list negatives and ignore other things like card membership fees, merchant fees (around 1.75% in the UK) etc

Very few UK cards have membership fees (mostly Amex with other costed benefits) and the rate of merchant fees are virtually irrelevant to the card issuer - it only gets interchange revenue...

adamp87

I don’t know why people assume credit card companies actively want people in debt with them to offer more credit. I don’t think I’ve ever read a company say this at all.

If some pays off in full each month they’ve made money via fees.

if some doesn’t pay off in full they make money on interest and fees but also run the risk that person potentially may continue to owe money, pay interest, fees and then not pay it back at all.

At which point usually within a few months they’ll sell the debt on to another company for pennies per pound.

It seems more logically they’d got for a safer customer surely? 

I don’t think this is a way to gauge a credit application, if you manage your accounts well, don’t have high debt usually as a rule of thumb most creditors would accept you.

But we can’t be privy to the exacts of their decision making process  

pth123

Hoenir said:

Why not buy the phone outright by using one of your credit cards ? 

My issue isn’t that I can’t buy the phone (I’m able to buy the phone outright if needed), more that I want to know why I was rejected for credit with a strong credit report as check my file weren’t able to tell me why I was rejected and I’m nervous as to what’s happened and if I will be repeatedly rejected in the future for various things without knowing the reason. When I spoke to check my file on the phone and they went through my report, they were also confused.