Egg’s actions could benefit some borrowers
February 19, 2008
The recent decision of the online lending giant Egg could actually benefit some customers according to a recent report, enabling them to prove their creditworthiness as a result of having their account closed. Egg recently announced that around 161,000 would have their credit card accounts closed, claiming that those affected were people whose credit profiles had deteriorated since they opened their credit card accounts.
Many customers were outraged by the Egg decision, claiming that their credit was excellent and that they always made payments on time. A number of officials feel that the reason Egg has withdrawn credit card facilities from many of these customers is because they are good payers and therefore to not make enough profit for the lender. Credit reference agencies have said that the card withdrawal will not leave a black mark on customers’ credit files, and could even help to improve their credit.
One official from Equifax said: ‘We don’t flag up whether an account has been withdrawn; we just highlight whether an account is open or settled. So in some respects, the Egg withdrawal of cards could work in a person’s favour.’
He also said: ‘We log that you have paid off a credit card balance, which will look good in the eyes of lenders. Also, one piece of advice I have always given people is - if you are rate tarting you should never leave a card open once you have moved the balance as the lender will only see the number of cards in your name. If you have too many cards you may be seen as too much of a risk. The Egg closure may help you also by reducing your card number and therefore increasing your creditworthiness.’
Tom Smith
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