Credit Card Providers Get Choosey About Who They Lend To
Most people know by now that the current recession has made banks and lenders of credit generally more risk averse.
The 100 per cent mortgage which two years ago was taken for granted is now almost a distant memory and more recently, we've seen lenders
become less willing to approve credit card applications too.
Although figures showing how much credit card providers have reined in their lending over the past few months are hard to come by, there is
widespread acceptance that credit card providers are being more selective with the type of people they currently give credit too.
More Credit Card Applicants Get Turned Down
The UK Cards Association estimates that around two to three years ago, one third of credit card applicants were being turned down, but it now
suggests this number has risen. In fact, it goes as far to say that since the second half of 2008, somewhere between 40 and 50 per cent of all credit
card applications are being rejected.
Defaqto, a financial research service also agrees that credit card providers are becoming more "choosey" about who they lend to.
David Black, banking specialist at Defaqto explained: "It is generally acknowledged that credit card providers are becoming far more choosey about
who they will lend to and how much they will lend.
"In the mortgage market, credit card providers are after quality rather than quantity. Credit card providers also monitor their existing customers to
determine those in, or possibly likely to be in financial stress.
"As a result, it's not unusual to get a letter saying that your credit limit is being reduced or your account is being closed."
Providers Change Interest Terms and Close Credit Card Accounts
In fact, according to a recent Confused.com survey which questioned 2,000 people from across the UK during the month of October, 20.4 per cent of
those polled have had their credit card account closed in the past 12 months.
Of these, 29.2 per cent had their card closed by the credit card company.