As the UK finally emerges from the economic turmoil, consumers are finally feeling confident enough to spend money on credit. However, the ‘Credit Index’ 1 and interactive map released today by TotallyMoney.com, the credit comparison website, examines the trials and tribulations of people trying to access the best deals. Research reveals that over the past year 61% of UK consumers applying for new credit cards have been turned down, a figure which is up 2% on the previous year. However, clinching the next best card clearly isn’t a level playing field with consumers across the country experiencing varying levels of success according to their circumstances. Every region has a different story to tell with vast variations in unemployment, cost of living, home ownership and indebtedness alongside many other factors – creating a credit postcode lottery.
TotallyMoney.com’s Credit Index and interactive map ranks more than 729,961 credit card applications based on the likelihood of acceptance or rejection across both mainstream and credit repair 2 products. This data covers 115 areas in the UK over the past year and all figures are relative to the national average. Dumfries has been crowned the credit card rejection capital of the UK with 64% of all those who applied for a credit card being turned down. From an economic perspective, this region has suffered with falling house prices (-11.3%) in the last year alongside higher than average unemployment levels (7.6%) 3.
When it comes to the type of product consumers applied for, 64% of those applying for mainstream credit cards were rejected last year compared to just 52% of those applying for credit repair cards. Therefore, many of the consumers who experienced a rejection could have had a better chance of acceptance if they opted for a credit repair product with more lenient lending rules rather than a table topping best buy deal.
|Rank||Highest credit card rejections||% Rejected||Highest prime credit card rejections||% Rejected||Highest sub-prime credit card rejections||% Rejected||Highest number of applications for credit cards|
|Rank||Highest credit card approvals||% Approved||Highest prime credit card approvals||% Approved||Highest sub-prime credit card approvals||% Approved||Lowest number of applications for credit cards|
|1||St Albans||44.0%||St Albans||41.1%||St Albans||52.4%||West London|
|3||Kingston-Upon-Thames||43.5%||Bromley||40.6%||Bromley||51.7%||South West London|
Source: TotallyMoney.com analysis, based on HD Data Solutions data
Looking across the UK, the Credit Index identifies a clear North South divide when it comes to securing the best credit card deals. The top ten places that have the lowest chances of securing credit cards are dominated by areas outside the South of England. There is just one appearance from the Midlands with Wolverhampton in fourth place. The Index shows that the highest proportion of credit card rejections were issued in Dumfries (64.2%), Sunderland (64.1%) and Kilmarnock (63.7%) with around two thirds of applications rejected in the last year. With unemployment rates hitting 11.4% in Sunderland and 10.9% in Kilmarnock alongside 4.2% and 4.9% (respectively) of residents claiming job seekers allowance – this could go some way to explaining the rankings.
The opposite is clear in the South, which is populated with the highest concentration of people with cleaner credit records. Interestingly, the top three areas in this table are outside of central London in the home counties of Hertfordshire (St Albans 44%), Kent (Bromley 43.6%) and Surrey (Kingston upon Thames 43.5%), with around 44% of residents likely to receive the credit card they applied for. These three areas also hold the top three spots for successful applications for credit repair products, with just under half of all applications likely to be approved. Harrogate is clearly the ambassador of the North in the top credit acceptance table as the only Northern area in the ‘best of’ rank at number four.
The Index also examines the most credit hungry areas in the UK. Blackpool clearly towers over the country, securing the number one spot for the most applications for credit cards per capita. With an overall rejection rate of 62% it’s closely aligned with the national average. However, when applying for market leading products this figure rises to 66%. Second and third in line for the most prolific applicants for credit were Kilmarnock and Manchester. In stark contrast, those living in West London and Shrewsbury made the fewest applications for credit per resident.
Will Becker, CEO and co-founder of TotallyMoney.com comments: “Our Credit Index has unveiled a wealth of insight and previously unseen data about rejection rates across the country. There are swathes of people struggling with their finances, particularly those in the North and Scotland. One of the key findings in this study is that credit card rejections actually increased last year which is interesting given the vast majority of lenders have actually relaxed their acceptance criteria over the same period. This can only mean that consumer confidence has started to increase and those with a poor credit history are making applications for credit again.
“Overall, whatever your postcode, it’s surprising to think that you have less than a 50% chance of being accepted. Amongst consumers there is a poor understanding about how many applicants actually get the credit card they apply for and the damage caused by multiple applications. So our advice is very clear: always make sure you use a service that shows how likely you are to be accepted before you apply for credit. It’s simply not the case that if you’re rejected by one card issuer you’ll be rejected by all. Finding the cards that are likely to accept you, more than doubles the average accept rate for users of the credit matching service on TotallyMoney.com. This service would have transformed the chances of acceptance for consumers across the UK, whatever their postcode.”
“Of those people declined in the last year, more than a third 4 (36%) stuck with their existing card to avoid another rejection. These people are some of the biggest casualties of rejection as they feel forced to stick with less competitive products. Switching to a market leading credit card saves the average balance transfer customer over £700 over the lifetime of the deal. This by far outweighs the average savings made from switching products such as energy and insurance.”
“As each provider has a different set of lending rules, consumers could more than double their chances of acceptance by using a credit matching service such as the one offered by TotallyMoney.com. This indicates which products the applicant is most likely to be accepted for in advance of the application.”
TotallyMoney.com, launched in 2007, is the UK’s leading credit-focussed comparison website which sets out to make it simpler for consumers to compare credit cards, loans and mortgages. With a revolutionary approach to credit comparison, TotallyMoney.com uses exceptional comparison tools to empower people to make better financial choices.
1. TotallyMoney.com’s Credit Index is generated from data and analysis from HD Decisions and TotallyMoney.com over the past 24 months. HD Decisions provides the ‘Apply with Confidence’ tool which is the leading ‘pre-qualification’ application for credit cards that leverages a detailed understanding of credit data and lenders’ credit policies, enabling consumers to see which products they are most likely to be accepted for before applying. Built on these results and TotallyMoney.com analysis, the Credit Index examines the credit profiles of 729,961 TotallyMoney.com applicants and their likelihood of acceptance and decline. These likelihoods are derived from a representative sample of providers (15 leading mainstream products and 5 credit repair products) across 115 areas in the UK over the past year, relative to the national average.
2. Mainstream/credit repair cards defined
3. Unemployment figures from ONS and house price figures from Land Registry and Scotland Executive Agency.
4. Based on research carried out through OnePoll (Q4 2013) amongst 2,000 credit card holders. In addition, 1,103 credit card holders were asked what type of credit card is their main card.