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By Reno Charlton
News Editor, 7 May 2008
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Recent research carried out by the Post Office has revealed that four in ten people are using their credit card to cover the cost of day-to-day spending.
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ACCORDING to a recent report the level of credit card rejections has rocketed in the UK, with an increasing number of applications for credit cards being turned down by lenders.
The global credit crunch has affected all financial sectors, including loans, mortgages, and credit cards, and an increasing number of people are finding that they are no longer able to get the credit that they need due to the tighter lending conditions that have been put in place by lenders.
18,000 rejections reported a day
A recent survey showed that around eighteen thousand credit card applications a day are being rejected by banks, as they continue to tighten up on their lending criteria.
In the last six months alone around 3.24 million applications have been rejected.
Barclaycard recently reported that it is rejecting around 50% of its credit card applications, as it has clamped down on lending in a bid to try and reduce bad debt levels.
One industry professional involved with the study said: "For years, borrowers have had the upper hand in the credit card game but the rules have changed. People with debts who thought they could keep shuffling their cards to stay ahead are running into trouble. Card applicants need to be confident that they are going to be accepted in the current lending environment. A credit rejection could have knock-on effects for borrowers when it comes to taking out all kinds of financial products including a mortgage."
He added: "Given the turmoil in the mortgage markets, the options are running out for people with problem debts. They need to take control of their borrowing and to reduce their debts."
Know your eligible
With so many lenders tightening up their criteria it's important to check you are at least eligible for the credit card you are applying for.
Lyndsey Burton from Credit Card Comparison Online, said that it was important that consumers check the eligibility criteria before applying for a credit card.
She said: "Lending conditions are tighter than ever these days, and consumers have to make sure that they qualify for the card before applying, otherwise the chances of a rejection are increased. For example, if you have damaged credit make sure you look for a specialist bad credit rating credit card rather than just applying for cards that you may not be eligible for."
Before applying always check that you meet the eligibility requirements from age and income to residential and employment status. All these requirements will be listed on online application forms before you apply.
It's also a good idea to be aware of your credit rating when applying for new credit, whether you have a good rough idea or if you get a definitive report from an online reference agency such as Experian or Equifax.
Knowing your score and then applying for an appropriately marketed credit card could mean the difference between being a statistic or being accepted.
 Credit card guide
Credit card news archive
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