Each week former trading standards officer Richard Thomson answers your questions.
Q I’ve recently been turned down for a credit card despite having a good credit record. Friends have told me it’s to do with previous occupants of my flat, and I may be on a blacklist. Can you help please?
A The reason your application was rejected is because you didn’t satisfy the lender’s credit scoring system.
It’s a myth that previous occupants can affect your credit rating. Research shows that over 70 per cent of people believe it – but it’s completely untrue.
The previous occupant of your flat could have been a millionaire, or have a string of unpaid debts, but that makes no difference to a lender’s decision about your credit application.
What they will be looking at is your ability to repay the cost of purchases or cash advances you put on the card. They’ll be checking into your individual circumstances. If you’ve recently moved, or moved more than once in the previous five years, you’re likely to be marked down as a higher repayment risk.
There’s no such thing as a blacklist either. And contrary to what pub pundits believe, credit scoring doesn’t take into account gender, religion, race or ethnic origin.
What is crucial is your credit history. Lenders wil look carefully at how well you’ve managed your personal finances over a period of time, because that is a good indicator of how you’re likely to behave in the future.
Curiously, some lenders turn down people with excellent credit records because they don’t use their cards very often, and pay up on the nail.
You can always ask the card provider why they rejected your application. Rather than go through all that hassle, why not simply apply for a credit card from another lender?
Q My wife and I have spent the last year fighting an insurance company, but it’s like banging our heads against a brick wall. One week prior to our wedding my father died and we had to cancel the honeymoon with the travel agent who told us to claim on the insurance. The insurer refused to pay up, and we are deeply upset that we are unable to resolve the situation. Can you help?
A Insurance is a rather special kind of contract between the insurer and the insured. The underwriters assess the risk the insurers are being asked to cover based on the information you supplied at the time you took out the policy.
They are claiming that you failed to disclose all the risks associated with the cancellation of your travel plans, and the Financial Ombudsman Service to whom you had already complained, agreed with them.
It looked like the end of the story – but not quite. I contacted the agent for you.
The agent has finally buckled, and you now have vouchers to the total value of your holiday. All you have to do is choose the destination and your belated honeymoon will finally become a reality.
Richard Thomson is a former trading standards officer with many years experience. If you have a question, e-mail him at firstname.lastname@example.org and wherever possible he will try to provide practical assistance. Unfortunately he cannot guarantee to respond to every letter or e-mail. Richard Thomson welcomes letters from readers on consumer issues. Replies are intended to give general help or advice, not a complete statement of law.