Last week after I explained how credit applications work (at the Ideal Home Show) a woman commented "that's ridiculous, it means it's anti-shopping around". She's right. Usually the only way to see if you'll get credit and at what rate is to apply, which leaves a mark on your credit file. So if what you're offered isn't good enough and you want to try elsewhere, it's now more difficult.
I've given evidence in Parliament on this, but nowt's been done. So three years ago we built our eligibility calcs and this year we've taken a further leap forward, getting a few MBNA cards on 100% pre-approval and now adding Aqua, which specialises in cards for those without a great credit history (ie, past defaults or CCJs).
1. What the eligibility calcs do. Our Loan and Credit Card Eligibility Calcs do a soft search (you see it on your file, lenders don't, so no credit-score impact), which usually gives odds of 0% to 95% for getting top deals, so you can home in where your chances are best.
As Kelly told us: "Legend. Used the eligibility calc, got 35mths 0% and shifted £11,000 from 29.9%. Shocked by the savings." That's a saving of £4,900 if it's cleared within the 35mths.
2. What does 'pre-approval' mean? With the 3 MBNA and 4 Aqua cards that allow this we can tell many people (not all) they've a 100% chance of getting that exact deal - subject to passing an ID and fraud check. There's no impact on your credit score, though of course if you then apply, that marks your file.
If you are pre-approved, that doesn't automatically mean it's the best card for you. The eligibility calculators will also show other top cards, and some may have better deals, so you need to balance the certainty versus the deal.
3. Pre-approved 39mths 0% balance transfers. A balance transfer is where you get a new card that pays off debts on old cards, so you owe it instead, at a cheaper rate. Our Balance Transfer Eligibility Calc shows which top cards you've the best chance of getting.
Use it to see if you've a 100% chance of getting this MBNA card*, which lets new cardholders shift debts to it at up to 39mths 0%, for a 2.98% fee (so £29.80 per £1k of debt shifted). That's only a month shorter than the longest 0% deal - Halifax's* up-to-40mths 0%, with a lower 2.58% fee.
If you can repay quicker, you can see if you've 100% chance of this lower-fee MBNA card*, with 32mths 0% (1.14% fee) - though a slightly lower 0.72% fee is available on the up-to-32mths 0% Barclaycard*.
a) Clear the card or balance transfer again before the 0% ends, or the rate on these cards rockets to 18.9% rep APR (20.9% MBNA).
b) Never miss the min monthly repayment or you can lose the 0% deal.
4. Pre-approved 0.5% cashback card with cheap spending overseas. The easy-to-get Aqua Reward card gives 0.5% cashback on all spending, and no 'load' when you spend abroad, so you get the same near-perfect exchange rates banks get - smashing bureaux de change.
It makes the best buys for cashback and overseas spending, but has a nasty 34.9% rep APR, so repay IN FULL each month to avoid it. And beware ATM withdrawals as you pay interest on them, even if you clear in full, plus a 3% (min £3) fee. Thus it's far better to use it to spend on abroad, than to withdraw cash.
How does it stack up? It's the only open-to-all card that does both cashback and cheap overseas spending. Yet for each separately it can be beaten.
- Overseas spending: The Halifax Clarity* and Creation Everyday* also have no 'load', but crucially have far lower overseas ATM charges and just 18.9% and 12.9% rep APRs. For full odds & info use the Travel Card Eligibility Calc.
- Cashback cards: The highest-paying cashback card is the Amex Platinum Everyday*, which gives 5% (max £100) in the first 3mths then up to 1.25% (22.9% rep APR). For full odds & info see the Cashback Cards Eligibility Calc.
5. Pre-approved 36mths 0% money transfers - ie, it pays cash into your bank. Some balance transfer cards also offer money transfers, which means they let you pay money into your bank, so you owe them at 0% instead. This is useful for clearing expensive overdrafts or as a small loan. Our Money Transfers Eligibility Calc shows which top cards you've the best chance of getting.
With it, you can check if you've a 100% chance of this MBNA card*. It lets you pay in cash to your bank for up to 36mths 0% for a 2.99% fee. That's the joint-longest MSE top pick 0% money transfer card, though the fee is higher than Virgin Money's*, which is 2.39% (min £3).
a) Clear the card or balance transfer again before the 0% ends, or the rate on all these cards rockets to 22.9% and 20.9% rep APR.
c) Don't spend/withdraw cash. It usually isn't cheap.
d) If you're using it as a loan, try to make a fixed repayment, so you'll clear all the borrowing and the fee over the 36mth 0% period.
6. Pre-approved credit (re)build card with £20 Amazon voucher. Credit rebuild cards are designed for those with either no credit history or a poor one, to prove themselves good credit citizens to boost their credit score.
The Aqua Advance gives a £20 voucher after 2mths if you stick to your credit limit and repay on time. It has a horrid 34.9% rep APR, so ensure you pay the card IN FULL each month to avoid interest.
How does it stack up? There are other similar cards, but the voucher makes this the winner. To see your odds use the Credit Rebuild Eligibility Calc.
How to use it? Get one, do £50-£100/mth of normal spending for a year, never missing or being late on repayments, and it'll start to help.
7. Pre-approved poor-credit 4mths 0% on spending. The Aqua Purchase gives 4mths 0% on spending, but is 34.9% rep APR after - it's the only 0% spending card targeting those with a poor credit history.
How does it stack up? The Post Office* & Clydesdale* allow accepted new cardholders 27mths 0% & 26mths 0% spending, but they need a good credit score. So use the 0% Spending Eligibility Calc to see your odds.
Warning: Only use Aqua for respite from payday loans/bank charges. New borrowing when you've poor credit is a bad idea. I include it because used cleverly it can take the pressure off payday loans or bank charges. To see how, read Repay payday loans via Aqua.
a) Clear the card or balance transfer before the 0% ends, or the rate on all these cards rockets to 34.9%, 18.9% & 18.9% rep APR.
c) Don't balance transfer/withdraw cash. It usually isn't cheap.
8. 35 tips to boost your credit score. The eligibility calculators are effectively a real life credit check - if your chances are low here, it'll be similar with mortgages and other products.
Yet credit scoring's a bit like going on the pull - you can do things to make yourself more attractive, but even then not every lender will appreciate you. For what to try, see my 35 credit boosting tips.
This article first appeared in the weekly email on 23 March 2016.