credit card rejections

[Beechy]

Just been reading in the paper that 1 in 4 credit card applications are being rejected. Is the credit crunch being felt by the lenders?

Dave Beech

[OPTIMIST12]

That sounds like good news. I was going to say that it would also be good if they did away with the frequently seen 0% balance transfer / introductory offers as these can lead to people overstretching themselves and hitting the rocks when the interest shoots up. But - there again - it is important to remember that the vast majority of people do NOT run into financial problems and I guess that these offers are good for them when used carefully. Being in an IVA can give you a bit of a one sided opinion sometimes!!!

But - like Beechy says - it certainly sounds like events are causing a rethink by the banks and if that means the criteria for credit are tightened right up then that must be a good thing after years of them being just too easy.

[Storm]

Not sure which lender that refers to .......

The current acceptance rate on MBNA and Barclaycard is 20% ie 1 in 5 accepted.

There have also been an impact in retail credit with APR's upto 30% having around 55% acceptance rate (historically 65%+)

[OPTIMIST12]

1 in 5 sounds even better!!!

[ray_a]

Yes basically and it is affecting the whole banking sector at the present!

Was told before christmas Car finance companies are suffering badly!

[cr15py]

I think the problem started about 10 years ago when credit seemed to be very easily available. I got a £1,500 credit card with a salary of £5,200!

But yeah, it's good news that the issue is now being "managed" a little better.

[Adam Davies]

Hi
If banks tighten credit acceptance we will see a surge in insolvencies.Many people,who are actually insolvent now,continue to pay their commitments by using credit lines to pay credit.If these lines are withdrawn or made unavailable the debtor has few options and formal insolvency is the only solution.
I expect to see a surge in personal insolvencies in the middle of 2008.
Regards

Andy Davie
IVA.co.uk Spokesperson and Website Manager

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[Beechy]

I agree, i have been looking at this an talking to lenders in the sub prime market. the indication are that people who were classed as prime are becoming sub prime. This week i have had a meeting with the salvation army who indicated that they are being asked to provide debt advice. We have agreed to run to clinics a week for them (free of charge of course).
All the indicator are showing an increase in the number of people who wiil have debt problem.
Thank goodness for this forum where people can find out some answers

Dave Beech