Don't be an innocent credit crunch victim

Liz Phillips, Daily Mail 10 October 2007

Borrowers without a blemish on their credit records are being targeted in the credit crackdown. Some credit card companies are imposing punishing interest rate rises on those they believe might be on the verge of struggling.


Signs they look out for are making only the minimum repayments - even if they are on time - or having several credit cards. MBNA doubled the interest rate on the credit card of recently widowed pensioner Frances White, from 15.9% to 27.9% in July, even though she had always paid more than the minimum amount on time.
Mrs White, 71, from Upminster, Essex, queried the rate rise but in the meantime the interest charges meant she underpaid in August. As a result, MBNA refused to cut the rate because she was in arrears. She says: 'This doubled interest, coming at the same time as my husband died, is most distressing.'
It is a stark example of how even those with exemplary borrowing records can be targeted by lenders and find themselves in difficulties they never imagined. An MBNA spokesman gave no explanation for the increase, simply saying: 'We regularly review individual customers' interest rates and might adjust the pricing up or down accordingly.'
Once Money Mail intervened, MBNA did offer to cut the rate to 12.9% for six months. The credit crackdown means that anyone with a black mark on their credit record - no matter how tiny - could be shocked the next time they apply for a mortgage, personal loan or credit card because they might no longer be offered favourable rates.
Black marks resulting from missing repayments or being late with them can lead to huge hikes in interest rate. But you don't even need to make these slips to blight your record.