Refused a credit card? Don’t take no for an answer!

17th February 2012  

You’ve paid all your bills on time, you think you’ve built up a good credit record and you think you’d be a prime candidate for a new credit card. But – can you believe it? The lender turns you down!

Is it your fault? Did you inadvertently chalk up a late payment on your council tax or mobile phone bill a couple of years ago?

Could that be what has resulted in you joining the legions of new potential customers who have received a terse ‘Thank you for your application, but unfortunately…’ letter?

Well, the truth is that it may not be your fault. You may be the victim of a much larger, global problem; over-zealous credit score criteria, or even a simple error on your credit record.

There’s also a rumour afoot that UK lenders are more inclined to lend their cash to overseas punters, rather than their loyal customers back home. They see emerging markets such as Asia as offering a higher return on their investment.

Over here it seems our unwillingness to pay credit card interest and our skill at dodging those pesky charges by smart managing (rate tarting) our credit cards and taking advantage of 0% balance transfers is gradually eroding credit card issuer’s profits. So, the lenders are sending their money overseas to reap the rewards of juicy interest rates, and to take advantage of less savvy consumers and the booming Tiger economy of the Far East.

The British Banker’s Association (BBA) also claims that lenders are being ultra cautious because of recent changes in legislation, and are now using their own (secret) lending criteria rather than the standardised system to define which applicants are suitable and which are not.

Why did I get turned down?

It could also be just a simple mistake. There are many stories about people with fair to good credit ratings who have been declined for everything from credit cards to store cards, often for no apparent reason.

Often however it can be down to a simple and easily rectifiable mistake on your credit history – it may be the case that your address, rather than you personally is flagged as a high credit risk, perhaps due to a previous occupiers inability to pay a bill on time.

If you’re not on the electoral roll that can also seriously affect your eligibility for credit.

Another situation that can influence your creditworthiness is having no history of previous borrowing. Even though you may have thought you were managing your funds wisely by avoiding borrowing, if you have no established credit history, a lender can’t see how well you manage credit and therefore automatically flags you as a high risk borrower.

Missed payments, CCJs and bankruptcy can also effect your credit score, as can the financial background of your spouse or partner.

What can I do?

If you think you’ve been turned down for a credit card because of a mistake on your credit record, the first thing to do is confirm your suspicions by checking your file.

There are several agencies that will allow you to look at your credit rating for a minimal charge, or even for free! (More information on a free credit check or how to get hold of your credit history.)

Write to them requesting a copy of your file, or check online. If you spot an error, you can have it rectified if you can prove it. This can take up to three months to appear on your credit record, but clearly its worth the wait to set the record straight.

If you have a good credit record, and a fair credit score there’s no real reason why you should be turned down for a credit card or other type of loan.

It may be intimidating to challenge a big lender, but if you feel that the decision isn’t a fair one then don’t accept no for an answer. Don’t be afraid to question the decision if you think the grounds for your refusal are dubious or based on incorrect information. Contact the lender you’ve applied to at the address on the application, or their head office (which will be listed on their website).

State in factual (and not emotional terms) that you’ve applied to them for a new credit card and that you’ve been turned down. Explain why you think their decision is unreasonable and unjustified, and state your case and offer proof of why you’re a good risk. Prove your income, your employment status, and confirm that you’ve checked your credit history and that there are no obvious problems.

Ask them to reconsider your application and if they’re still diffident, ask them to say why. In 50% of cases, they will reconsider your application and you may end up with the credit card deal you wanted in the first place, maybe even a better one. Good luck!

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