Refused credit

[Goodie]

After always living under a cloud, certain that I have a good credit rating, I received an abrupt kick up the arse over the weekend when I was rejected for a credit card. I have never had a credit card before, however I have had some forms of credit such as mobile phone, sofa finance, monthly car insurance and jewellery finance. About a year ago I did have a burtons store card to get the introductory discount on a suit that I was purchasing. About 18 months ago I bought a television and opted for the pay in 6 months option. So I have had some forms of credit to help to build up a history.

I have decided to purchase a new laptop for some upcoming lecturing work that I will doing, as well as providing me with something portable on which I will be able to write my dissertation. I thought that one of the best options would be to get a credit card for purchases with a long introductory interest free period, so I applied for the NatWest card which provides 18 months of 0% on purchases; however after the application process I was abruptly refused.

I am aware of the 'footprint' left behind on your credit file by a credit card application and this has left me a little weary as to applying for any others. Is it a case of the cards offering the best rates have a much higher minimum credit rating that they require? Or is it that the examples that I have given in the opening paragraph aren't significant enough to build up a good credit file? I'm at a loss as to why I was refused and it's left me a little paranoid as to what my issue is.

 

[The Halk]

There's more to it than your credit history. Lenders use profiling to determine if you're in a good or bad risk category.

As far as a footprint, all that's recorded is that a search was done, not their decision.

 

['Harry]

Mobile phone contracts mean nothing really. As soon as you reach 18 anyone can get one.
Sofa - 0% interest, so not a money maker.
Car insurance - DD - again not a money maker
Jewellery fiance - Probably not a high amount?

You've had no 'real' credit.

 

[The Halk]

Harry, I'm afraid you don't know what you're talking about.

Ignore his post OP.

 

[Morgoth]

Are you employed?

 

[The Halk]

If it helps...

Employed full time
Paid monthly
Married
2 or less children
Same job for 5+ years
Same address for 5+ years
Mortgage
Salary over 30K
Over 30, under 60
Good post code

Those are key things on the profiling, last time I looked, your credit history is also looked at, but there's lots of refusals possible if you don't hit most of those.

 

[[TW]Fox]

As far as a footprint, all that's recorded is that a search was done, not their decision.

Fairly obvious though, search and no subsequent account usually = rejected.

 

[[TW]Fox]

Sofa - 0% interest, so not a money maker.

0% interest on a product with huge margin - its a massive money maker. Lend people 'interest free' money to buy an expensive sofa. The interest is in the price of the sofa

Car insurance - DD - again not a money maker

Rubbish - car insurance monthly is typically 20-30% APR.

Jewellery fiance - Probably not a high amount?

Typically another high APR product.

You've had no 'real' credit.

Wrong.

 

[The Halk]

Fairly obvious though, search and no subsequent account usually = rejected.

When I checked it was only if there were several applications that it was assumed to be the case by automatic systems.

If it's within the past couple of months then it's assumed to be not open yet, or the customer declined the terms/didn't return the forms.

Regardless of everything else several/many applications is enough to get a flat decline, just to be on the safe side.

Lenders are worried about two things - if you've been declined in 4 or 5 other places then they want to decline too. If you've applied for a lot of credit recently then it could be an attempt to access a large amount of money and then default.

 

['Harry]

If it helps...

Employed full time
Paid monthly
Married
2 or less children
Same job for 5+ years
Same address for 5+ years
Mortgage
Salary over 30K
Over 30, under 60
Good post code

Those are key things on the profiling, last time I looked, your credit history is also looked at, but there's lots of refusals possible if you don't hit most of those.

I've had over 20k in credit, yet only two of those applies for me.

Employed full time
Same address for 5 years

Granted none of it was 0% APR.

 

[The Halk]

I've had over 20k in credit, yet only two of those applies for me.

Employed full time
Same address for 5 years

Granted none of it was 0% APR.

That's super. That list is what's desirable in an applicant - or was the last time I looked at the secret sauce.

Some of it is vital, and some just helps. For example if you're paid weekly then some lenders will score that so badly it's virtually impossible to get accepted.

 

[Goodie]

Yup, employed by the same company for 6 years and I have lived in my current property for just over 3 years now. The prerequisite of the card was to be over 18 (I’m 28) and also to earn £X amount of money (of which I earn £8k above this threshold). I have also got a graduate overdraft (which has helped to fund me through the majority of my masters; however I am still a long way from being fully into the overdraft and meet all required payments.

One thing that I did think might have been a problem was that I used to bank at NatWest from about the age of ~14 until about two months ago when I decided to close the accounts down as they were not active (as I have switched my banking to Barclays). I don't see that this would be a valid issue to be refused but I can’t think of much else.

Halk, with regards to the footprint, I was under the impression that they were bad for the credit rating and that if I were to have multiple on there over a short period of time that it would damage my rating, am I wrong in thinking that?

Thanks for the help

 

[WrathOfAchilles]

https://www.noddle.co.uk/

 

[Goodie]

Employed full time check
Paid monthly check
Married no, but cohabiting
2 or less children check
Same job for 5+ years check
Same address for 5+ years 3 years
Mortgage no, private rent
Salary over 30K nope
Over 30, under 60 28
Good post code not totally sure, wouldn't be classed as a bad one though

not really perfect, but not too far off

 

[The Halk]

Yup, employed by the same company for 6 years and I have lived in my current property for just over 3 years now. The prerequisite of the card was to be over 18 (I’m 28) and also to earn £X amount of money (of which I earn £8k above this threshold). I have also got a graduate overdraft (which has helped to fund me through the majority of my masters; however I am still a long way from being fully into the overdraft and meet all required payments.

All of that information is positive, and together it should make you a very attractive customer.

One thing that I did think might have been a problem was that I used to bank at NatWest from about the age of ~14 until about two months ago when I decided to close the accounts down as they were not active (as I have switched my banking to Barclays). I don't see that this would be a valid issue to be refused but I can’t think of much else.

That's possible. Sometimes lenders who are also banks will look at your bank account and use that to make a decision. They may not realise you bank elsewhere. Other lenders will only offer cards to bank account customers. It's possible that if you applied with Natwest they used your bank account to make a decision.

Halk, with regards to the footprint, I was under the impression that they were bad for the credit rating and that if I were to have multiple on there over a short period of time that it would damage my rating, am I wrong in thinking that?

You're quite correct. One or two will do no harm, but when you've got 3 on there in the past month it's not healthy, and more will put any chance of credit in jeopardy.

You might want to sign up at Noddle and make sure there's no howlers on your credit history - fraud or a mistake for example.

Shop around for a good credit card and apply for it once you've done that. You should be able to pick and choose between them.

Edit : 28, co-habiting, renting. Those are also possible reasons... it can be a bit like car insurance quotes, sometimes a company will produce sky high quotes for some customer categories because they don't want any more on their books. Sometimes lenders will do the same - more and more lenders are using profiling rather than credit history to decide.

 

['Harry]

Cheers Fox. I stand corrected.

OK. Lets try it this way.

This is how I built my credit rating.

Small loans £250-500 (repaid in full)
Small credit cards (as above)
Phone contract £25pm - Normal bill was £70+ a month - Paid on time always (old school before they done minute/text packages)

Credit checked myself (Rated 989/1000 Experian)

Then 5k loan - paid on time/6months
Another 5k loan (as above)
2 5k cards (paid on time)

I don't know if it will work these days, as this was before the 2008 crash.

 

[Goodie]

All of that information is positive, and together it should make you a very attractive customer.



That's possible. Sometimes lenders who are also banks will look at your bank account and use that to make a decision. They may not realise you bank elsewhere. Other lenders will only offer cards to bank account customers. It's possible that if you applied with Natwest they used your bank account to make a decision.



You're quite correct. One or two will do no harm, but when you've got 3 on there in the past month it's not healthy, and more will put any chance of credit in jeopardy.

You might want to sign up at Noddle and make sure there's no howlers on your credit history - fraud or a mistake for example.

Shop around for a good credit card and apply for it once you've done that. You should be able to pick and choose between them.

Edit : 28, co-habiting, renting. Those are also possible reasons... it can be a bit like car insurance quotes, sometimes a company will produce sky high quotes for some customer categories because they don't want any more on their books. Sometimes lenders will do the same - more and more lenders are using profiling rather than credit history to decide.

I signed up to Noodle earlier however the confirmation email seems to have been lost in transit. I'll give it tonight and if nothing comes through I'll sign up again tomorrow. When I have been able to read that I'll get back to you. Thanks for taking the time to help mate, much appreciated.

 

[Pawnless Endgame]

I didn't do very well below. Tried applying for Alliance & Leicester. Rejection letter came back simply saying "third party withdrawal". Yes that's very helpful whatever third party withdrawal means Tried again with A&L when I got my house and they accepted me. It's probably the mortgage that did it for me.

Employed full time - no
Paid monthly - yes
Married - no
2 or less children - no
Same job for 5+ years - no
Same address for 5+ years - yes
Mortgage - yes
Salary over 30K - no
Over 30, under 60 - yes
Good post code - how do I tell?

 

[Camalot]

I'm rated 1/5 on noodle, not sure why!

 

[mrmoose]

I'd speak to the underwriter for this one as they may perhaps give you the reasons you failed their credit scoring. You can always contest the decision.