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Refused a credit card, but don’t know why?

Man ripping up credit card application

When money’s tight, a credit card can prove useful to help balance the books. But what happens if you don’t get the rate you wanted? Or worse still, what if you’re refused altogether?

There are plenty of adverts for credit cards with decent rates, but there’s no guarantee you’ll benefit from any of the attractive rates on offer.

But why is that? Well, in 2011, new rules came into effect (European Consumer Credit Directive) which said that credit card companies only need to offer 51% of successful applicants their advertised annual percentage rate (APR). This was down from the previous minimum of two-thirds of applicants.

The change allowed credit card companies to offer more of their customers a higher interest rate than the one advertised.

Getting left in the dark

One Which? member experienced this problem recently. They said:

‘I’m 68 and recently applied for a 0% balance transfer credit card with Halifax. The advertised rate was initially 18%, but I was offered 24%. I challenged this and Halifax advised me to get a credit rating.

‘I was amazed to find I was penalised for my age, despite having sufficient income to pay the monthly instalments. Is this common practice or was I just unlucky?’

Lenders assess each credit card application on an individual basis, taking a wide-range of information into account. Their assessment is largely based on a borrower’s ability to repay. This then affects the rate offered – if an offer is made at all.

One size fits all

When a credit card application is rejected, customers are often left in the dark by the provider as to the reason why. Often, they’re simply told to check their credit file, without being told which factors had negatively affected their application.

Would it be too difficult for lenders to explain to applicants why they were refused, and provide them with practical action points? Simply being told to ‘check your credit file’ doesn’t seem particularly helpful.

Have you ever been refused a credit card? Were you given a reasonable explanation? If the rate offered was higher than the advertised rate, did you accept it, or go elsewhere?

Sarah Williams says:
30 April 2013

I recently applied for a cash back credit card. I have no bad debts, I am single, no dependents, earn £31,800 a year and have always paid off my existing credit card. I was told to check Experian – which I did, to find out I have a good credit score.

I have recently written to the credit card company asking why I was refused as I am concerned about the negative impact this could have on my credit rating.

A. Foyster says:
4 September 2017

This has just happened to me, with the Post Office. I’m in the same position. I had a credit card but the bank stopped it because I never used it! Now I’m travelling abroad, I need a credit card.

Industry guidelines require lenders to tell you the principle reason for refusing a credit application, but you may need to ask for this. It’s always worthwhile as it can reveal things you can do to improve the situation for next time. If the decision was solely because of your credit score – the lender’s statistical assessment of all the information at its disposal – you can by law ask them to review your application manually ie by a person. This right was introduced in 1998 when the Data Protection Act was updated. It’s not widely known though!

By the way, being refused credit isn’t registered on your credit report, just the fact you applied. Lots of applications don’t look clever though so try to space out your credit applications where possible and investigate any refusal before applying elsewhere.

dellbob says:
3 May 2013

2 years ago, aged 66, I was turned down for a credit card advertised to me by Santander solely on the basis of my credit score. I have no debts, own my home outright, have a good income well above the national average and could see no reasonable reason for a poor credit score. That is except my credit file showed me has having too many alias names which were in fact nothing more than slightly different versions/combinations of my name (eg Bob/rob/Robert) and initials fed into computers by finance clerks often in error. My wife suffered similarly with misspellings of her name Jacqueline. The simplistic computer generated credit scores are not wise enough to cope with this simple explanation of aliases and I am glad I no longer ned to be at the mercy of crude credit scores.

james kean says:
3 May 2013

I have recently applied for several mortgages, been fast tracked to the point where have had surveys done, all been agreed, then at the last minute the file has been pulled at head office and then mortgage declined without any explanation and no grounds to appeal. It is a joint application for me and my partner borrowing 50% loan to value, both experian reports very good and with lenders that experian has suggested to us. I have been told by my mortgage adviser that they have never heard of a case being underwritten and approved to then be pulled by head office. Can any one advise me on what to do next and what the reason for this might be.

Any comments would be greatly appreciated as unsure what to do next, thanks.