Lenders get tough on credit cards

Credit card companies are getting tougher with applicants, according to new research from MoneyExpert.com. Up to 2.8 million people have had credit card applications turned down in the last six months. This is equivalent to 15,555 rejections each day. With increases in bad debt affecting banks and other credit card lenders, many have tightened the rules on new applications, says the financial comparison site. Bad debt problems in banks have increased as people have been unable to meet repayments on loans and credit cards. Barclaycard, the UK’s biggest card firm, lost £1.5 billion n bad debts.

According to the research six per cent of Brits have had credit card applications rejected, while 10 per cent of people have had applications for a range of financial products rejected. Those who are aged between 25 and 34 are most likely to have card applications rejected, with 11 per cent of that age group being turned down in the last six months. This compares with eight per cent of those aged 18 to 24 and only three per cent of those above the age of 55. And Londoners are even more likely to be rejected, with a rate of eight per cent in London compared with six per cent across Great Britain.

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.’

He added: ‘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. The concern however must be that some people who genuinely need access to credit are being excluded in the general clampdown.’