Ever received an offer via mail when you’ve never asked for it? Be it a retails store card or a credit card offer?
Ever been offered a credit card by a teller at 1 of the chain stores that also have credit cards? This would happen if you use a credit card to pay for items.
The rationale behind was simple. If you have a card from my competitor you probably are good risk, so I might as well fight for market share errm, wallet share.
In some cases it would seem no proper affordability study would be done since you just received the offer by post… Ditto 4 retail store accounts
Enter NCA…
Now in order to be granted credit, the credit grantor has to perform a comprehensive affordability study on any potential customer. To do that they would have to get permission from you to look at your credit history e.g. pull your credit report unless you approached the credit grantor for credit!
This means pre-approved offers are effectively a thing of the past. Why, you ask? Well part of an affordability study is to ask the consumer what their current credit obligations are. Now if the credit grantor pre-approves an offer without ever talking to the consumer how would that credit grantor know what the consumer’s exposure is? This could potentially be reckless lending.
Do you agree or disagree with this article? Please comment and be heard!
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