Credit card crackdown as lenders get tough

Credit card companies are getting tough with up to 2.8 million people seeing applications turned down in the past six months, shock new research from MoneyExpert.com reveals. That equates to around 15,555 rejections a day.

The independent financial comparison website’s research shows the rising tide of bad debt hitting banks and other credit card firms is forcing them to tighten rules on new applications.

Bad debt problems at banks have been mounting since last year as more and more people have reneged on repayments on loans and credit cards. The UK’s biggest card firm Barclaycard lost £1.5 billion in bad debts last year on its own.

MoneyExpert.com’s research shows six per cent of people across Great Britain have seen card applications rejected in the past six months. Around 10 per cent of people in total have had applications rejected for a range of financial products.

Sean Gardner, Chief Executive of MoneyExpert.com, said: “Credit card companies have been badly burnt with bad debts and are putting the shutters up in response by turning down more and more applications.

“Anyone with debt problems who is hoping for an easy way out by taking out another credit card is liable to find that they’ll be turned down.

“It is entirely sensible for credit card companies to reject applications from people with debt problems or who look as if they have already borrowed enough. Rising interest rates mean it is harder to service debts and people should not be encouraged to get deeper into debt.

“The concern however must be that some people who genuinely need access to credit are being excluded in the general clampdown.”

People aged between 25 and 34 are the most likely to have card applications turned down – 11 per cent of them have suffered in the past six months compared with eight per cent of those aged 18 to 24 and just three per cent of the 55 and above age group.

People living in London are more likely to be turned down – the rejection rate in London is eight per cent compared with the six per cent for Great Britain as a whole.

MoneyExpert.com offers a free credit profiling service which helps people to understand their likely credit profile by answering straightforward questions about their credit history. MoneyExpert.com then recommends products from financial providers who lend to consumers with similar profiles, which lessens the likelihood of rejection.