credit rating best you can get but declined credit?

What Dennis said I think is universal (regardless of US or UK).

except the part about closing your credit card accounts if you're not using them.  Every US personal finance source I've ever seen has said that it's a bad idea to close unused accounts, because if you have any debt at all, closing your accounts means you have less available credit so your debt to available credit ratio, which is a big part of determining your credit score in the US, looks worse.  I don't know if it's different in the UK, though, it may well be.

Thanks everyone. I haven't phoned the bank yet but probably will today. It will be interesting to see what they say.

except the part about closing your credit card accounts if you're not using them.  Every US personal finance source I've ever seen has said that it's a bad idea to close unused accounts, because if you have any debt at all, closing your accounts means you have less available credit so your debt to available credit ratio, which is a big part of determining your credit score in the US, looks worse.  I don't know if it's different in the UK, though, it may well be.

Also, if your unused accounts are older than your used accounts, then you are shortening your credit history.

I also don't know if this is different in the UK.

Hi all!

Have a quick look at this site -

http://www.uswitch.com/DebtAdviceCentre/Insiders-Guide9.html?CurrentPage=9

I always try to 'quote' stuff from reputable and well known sources - uswitch being both of those.

Now as springhaze mentions, things may well be different for the USA, so it pays to research the same systems respective to each country to find out subtle differences between them.

Cheers! DtM! West London & Slough UK!

According to Motley Fool, UK lenders don't like you having dormant accounts or credit cards with lots of available credit because it means you might go on a spending spree.

http://www.fool.co.uk/credit-cards/information/what-is-a-credit-report.aspx

This seems like it means, basically, that the more credit you have the less likely you are to receive credit 

I think that if you have lots of available credit than you aren't likely to overspend, because if you were an over-spender you wouldn't have that available credit in the first place.

That's the point though.  Lenders really want you to overspend, as that makes them more money.

Vicky

That's the point though.  Lenders really want you to overspend, as that makes them more money.

Vicky

Agreed, but that's not how it's explained in the Motley Fool article (and I've seen their explanation in a couple of other places).

But then, if you do overspend, you might not be able to pay them back at all.

So:

1. If you don't have credit cards, it's hard to get good credit because you don't have a credit history.

2. If you do have credit cards, and you spend a lot of money on them, it's hard to get good credit because you may not have enough income to pay back all of your creditors.

3. If you do have credit cards, and you don't spend a lot of money on them, it's hard to get good credit because

       a. You might suddenly spend all of your available credit at once, and then not be able to pay any of it back, or

       b. If you continue not to spend money, the credit card companies don't make any more money off you.

I'm surprised that anybody has credit at all.

Putting it that way, yes, I see your point.


Vicky

Agreed, but that's not how it's explained in the Motley Fool article (and I've seen their explanation in a couple of other places).

But then, if you do overspend, you might not be able to pay them back at all.

So:

1. If you don't have credit cards, it's hard to get good credit because you don't have a credit history.

2. If you do have credit cards, and you spend a lot of money on them, it's hard to get good credit because you may not have enough income to pay back all of your creditors.

3. If you do have credit cards, and you don't spend a lot of money on them, it's hard to get good credit because

       a. You might suddenly spend all of your available credit at once, and then not be able to pay any of it back, or

       b. If you continue not to spend money, the credit card companies don't make any more money off you.

I'm surprised that anybody has credit at all.

But really to build good credit isn't the idea to have credit cards, use them, and pay them back promptly in full?  That's what I have seen recommended.

hiya
What Professor Potts mentions is absolutley right! thats also the puzzle the vast majority of consumers in the UK have no clue about - effective money management and the fall out is the 'culture' within the UK of 'buy now, buy on credit' and conveniently forget that 'you have to pay it back' !!!

What Geeta said is basically what everyone who has credit cards 'should' do - but of course don't!

Also, I think you 'can' have lots of credit cards at zero or nil balance - I did for years and my rating wasn't marked down, when I had to list outstanding debt for my mortgage application some years ago, the broker almost fell off his chair when I put zero in my credit card debts except for one card which only had a balance of only -£400!!

Use your cards, pay it back at the end of the month - repeat, repeat, repeat = credit rating will be good!

Cheers! DtM! West London & Slough UK!

Dennis, how do you have a credit card balance of -£400?!?

It's really simple why you were not approved. 

1.  No previous credit card. (scratch this if you already have a credit card)
     What you could do is apply to a bank that is alot more lenient and establish credit this   way.
2.  The late payment (explanations won't matter to them)

I started out with a student credit card when i was in college.  When my wife moved to the US she applied through a bank that catered to those that never had a credit card or new to credit.

It is true that to build credit you must use credit but don't keep a high balance.  Second never close any revolving accounts.  Of course lastly pay all your bills on time no matter.  That's it!  But we are human and make mistakes...

We recently paid to get my Experian credit report and were very pleased to see I have a credit score of 97.1 which is 'excellent'. However, I have just been declined for a credit card from my own bank. We are going to query/appeal but first I wanted to see if anyone can shed any light on why I may have been declined.

We are assuming it is because I'm not on the electoral roll. I have had an excellent salary going into my account for the last several months and have only one late loan payment which we can explain if they queried this (transitioning between jobs). I have recently increased my overdraft so I guess that may count against me? My personal debt is not that large overall.

My bank does use Experian, not Equifax so we have not looked at what they might have to say about me yet.

Ideas?

nc73, it's really not this simple.  I have in the past missed one payment, I am self employed, I have not had a regular salary going into my account for several years, but I have had no problem in getting TWO credit cards with credit limits for much higher than I requested.  My credit rating is lower than balmerhon's, but still I get offered cards.

Balmerhon - my first card after going self employed was with MBNA.  I'd recommend trying them. I only applied to get a free hat, I didn't actually expect to be approved at all, and they had no problem with my previous missed payment.

Vicky

Dennis, how do you have a credit card balance of -£400?!?

I don't know what Dennis did, but I had a credit card balance of about -£230 at one point with Abbey credit card because they kept messing up my payments and taking ages for my payments to go through so I took the chance of overpaying them rather than miss the payment deadline and having to pay interest and charges anyway.

I also feel it's best to pay off all your credit card bills as soon as they are due, which is what I do, but then, according to another thread, if you pay off a large sum at once, you are considered a potential terrorist.

It's really simple why you were not approved. 

1.  No previous credit card. (scratch this if you already have a credit card)
     What you could do is apply to a bank that is alot more lenient and establish credit this   way.
2.  The late payment (explanations won't matter to them)

I started out with a student credit card when i was in college.  When my wife moved to the US she applied through a bank that catered to those that never had a credit card or new to credit.

It is true that to build credit you must use credit but don't keep a high balance.  Second never close any revolving accounts.  Of course lastly pay all your bills on time no matter.  That's it!  But we are human and make mistakes...

Gee, thanks for the tips. As I already stated in previous posts, I DO have another credit card - and it is from a very good lender. Being that you aren't in the UK and don't know the system, I'm not sure how you know that one late payment would rule me out given what others have said.

Vicky, good to know. I'll bear that in mind.