Kilmarnock leads UK for credit card rejections

http://www.theguardian.com/money/2015/mar/25/kilmarnock-leads-uk-for-credit-card-rejections

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Kilmarnock in Scotland has been named as the location in the UK where applicants for credit cards are most likely to be turned down.

The town, 20 miles south west of Glasgow, has been battered by factory closures and industrial decline, but to add to its woes a sign now hangs metaphorically across the area saying “do not ask for credit, as refusal often offends”.

Only 34.8% of applications for credit from people in the Kilmarnock area – covering a total population of 371,500 in the KA postcode – were accepted by credit card companies. The next lowest in the UK was Sunderland, followed by Dundee, Dumfries and Newport.

The figures are based on acceptance data from 250,000 card applications over the past 12 months across the UK, compiled by financial website TotallyMoney.com.

Kilmarnock has a proud industrial history which includes locomotive making as far back as the 1830s, carpet weaving, shoemaking and tractor manufacturing, with Saxone and Massey Ferguson both at one time large local employers. But it was best known as the original home of Johnnie Walker whisky, until Diageo closed the bottling plant in 2011. Following the plant closure, and as the financial crisis unfolded, unemployment in the area rose to among the highest in Scotland.

Cathy Jamieson, MP for Kilmarnock and Loudoun, and shadow financial secretary to the Treasury, said: “Although credit card acceptance isn’t necessarily the best measure of financial exclusion it is certainly a contributing factor, so I am very concerned at the low acceptance rate in my own constituency.

“Those who don’t have access to mainstream finance are more likely to borrow money from high-cost credit providers such as payday lenders and become trapped in a pernicious cycle of debt. Labour is committed to addressing these problems and our recent paper on banking reform set out the steps we will take to combat financial exclusion and ensure those who need it have access to affordable credit.”

Although an almost 35% acceptance rate will strike many people as low, in reality the credit card industry routinely rejects large numbers of applicants for their best deals. The areas listed as having the highest acceptance rates in the UK – which includes many postcodes in west and south west London – still reject around half of all applicants.

However, it is a postcode area on the fringes of east London, not usually regarded as a beacon of affluence, which ranked as the highest for acceptance. Ilford, in the London Borough of Redbridge, came top of the table.

According to the researchers, factors that are likely to lead to a low eligibility score for credit include a history of unreliable credit with missed payments, exceeded credit limits, defaults and bankruptcy. Missed utility bill payments may also be reported to credit agencies and reduce an individual’s creditworthiness. Making many credit applications in rapid succession will make lenders suspicious and reduce an individual’s likelihood of acceptance. A lack of stability – frequent address changes, not being registered to vote, even not having a fixed telephone landline – will also make lenders nervous.