0% Cards draw you in with big offer but reduce offer by 80% at point of completing application

Terry_conquest

I was interested in taking advantage of a 0% on purchase credit card, After completing their,  comparison sites listed cards offering guaranteed acceptance for the amount I wanted. My credit rating on Experian couldn't be any higher! Marks & Spencer were one such company. After completing the application on their site they were prepared to offer me a card with a limit of 1/5th of what I asked for.  I can only assume that my credit rating suggested that I was guaranteed to pay the money back without problems. I understand that from their perspective, it would not be profitable to lend to me but why waste my time by telling me that i would have guaranteed acceptance for a much higher figure only to reduce it by 80% when the application was completed.  

cymruchris

Terry_conquest said:

I was interested in taking advantage of a 0% on purchase credit card, After completing their,  comparison sites listed cards offering guaranteed acceptance for the amount I wanted. My credit rating on Experian couldn't be any higher! Marks & Spencer were one such company. After completing the application on their site they were prepared to offer me a card with a limit of 1/5th of what I asked for.  I can only assume that my credit rating suggested that I was guaranteed to pay the money back without problems. I understand that from their perspective, it would not be profitable to lend to me but why waste my time by telling me that i would have guaranteed acceptance for a much higher figure only to reduce it by 80% when the application was completed.  

It wasn't guaranteed 100 percent - it was guaranteed subject to final checks when the hard search was completed. It would have been there in the small print that to be fair very few people take notice of. Your credit rating could be a lot higher, for example if someone had twenty credit cards spending £100k a month and paying off in full each time with an income of £5 million pounds per annum would no doubt be significantly more creditworthy than most of us.

Your credit score on the other hand that you might be alluding to means nothing. If you have a 999 score - that doesn't mean you're the most creditworthy person in the world - it means some daft computer algorithm thinks that's where you are, but in reality you're not. It's just a made-up marketing gimmick. When M&S looked at all the data on your history when the hard search was completed - and married it against their internal card/limit setting criteria - they decided to offer you the amount of credit they did. 

It's a combination of factors but primarily your HISTORY that decides what you get offered rather than a 'rating' or a 'score'.

Additionally its been known that comparison sites aren't always the most accurate. If you want a particular card - try the eligibility checker directly on a lenders website for a more accurate reflection of what you might get offered. 

DullGreyGuy

Terry_conquest said:

I was interested in taking advantage of a 0% on purchase credit card, After completing their,  comparison sites listed cards offering guaranteed acceptance for the amount I wanted.

Which comparison site? Some do appear to have engagement from at least some card issuers others are clearing making up the scores. Most just give you a percent chance of being accepted and no guarantee (and the few that do guarantee are still subject to final checks). 

Did the site give you an indication of limit? Did you do the soft check on M&S website before applying? Did it give you a limit indication?

Last time I applied via a comparison site it gave NW and MBNA as guaranteed acceptance but no indication of limit with either. As NW has a soft checker did that first and it said limit would be £1,500 so applied for the MBNA card instead and they gave a £30,000 limit.

Personally not experienced ClearScore's predictions not being correct or limits reducing between soft check and hard application but clearly other comparison sites use a random number generator. 

elasto

In my experience it's almost completely random what limit you get offered. I applied for two cards on one day and one bank gave me 20x what the other one did.

As the other poster says, it's credit history rather than credit score that matters - and different companies value different things about your history. One firm might like that you have a large line of credit you are not using (since it shows you are trusted and trustworthy) whereas another firm might dislike it (since you might go mad and suddenly accrue a high debt to income ratio).

Use the lender's own eligibility checker wherever possible for the most accurate predictor, and don't be afraid to open a second card if the first one disappoints. In my experience lenders don't view that as a red flag (assuming you don't try to open half a dozen on the same day or something...)

Nasqueron

Terry_conquest said:

I was interested in taking advantage of a 0% on purchase credit card, After completing their,  comparison sites listed cards offering guaranteed acceptance for the amount I wanted. My credit rating on Experian couldn't be any higher! Marks & Spencer were one such company. After completing the application on their site they were prepared to offer me a card with a limit of 1/5th of what I asked for.  I can only assume that my credit rating suggested that I was guaranteed to pay the money back without problems. I understand that from their perspective, it would not be profitable to lend to me but why waste my time by telling me that i would have guaranteed acceptance for a much higher figure only to reduce it by 80% when the application was completed.  

Comparison sites aren't the lender, their guaranteed acceptance is as reliable as a chocolate teapot, they are using a calculated guess based on the data they have and how they think lenders will see you. That said - you were accepted, you just weren't as credit worthy as you thought. Lenders would make more money from you spending more, due to their merchant fees, they didn't give you a high limit because their system said you're too risky for that

WillPS

I've never seen a comparison site offer a "guarantee" of acceptance with a certain credit limit. Are you certain they did?

DullGreyGuy

WillPS said:

I've never seen a comparison site offer a "guarantee" of acceptance with a certain credit limit. Are you certain they did?

ClearScore do "guarantee" acceptance on some products... some will include limit and APR others can be one, the other or neither. 

I was surprised a while ago when doing a soft search with a lender they confirmed acceptance but with an increased APR. Went to ClearScore and got a guaranteed acceptance and lower APR from the same lender. Went through their link and the lower APR is what was given so in principle Clearscore was more accurate than the lenders own checker.