How we decide who to lend to
Our strict lending criteria helps prevent prospective customers from taking on more credit than they're able to cope with. Using sophisticated techniques, we're able to determine the ability of potential customers to pay.
Assessing our risk, and theirs, involves:
- Using credit scoring tools
- Behavioural analysis to determine their ability to pay, how stable they are, and their willingness to pay
- A calculation of their debt-to-income ratio, which provides a score that helps us gauge if they are able to handle any more debt.
Having such rigorous standards in place means we accept fewer applicants, with those who go on to become our customers being of a higher calibre.
Helping customers manage their finances
We keep our customers informed with credit guides to help them survive financial strain at different stages of their life. Other measures we put in place include:
Monitoring credit limits
Because we're very careful about whom we lend to, our rates and credit limits are generally lower than the industry averages. Only the most stable customers are offered higher credit limits as they have a lower risk of financial stress.
When we see signs that a customer is struggling we take quick action and reduce the amount of credit they can access, to prevent further hardship and over-exposure. Steps we take may include restricting cash withdrawals and lowering credit limits.
Offering fair and transparent rates
We aim to keep our interests rates as competitive as possible. If we discover that a handful of customers are on unacceptably high rates, we immediately investigate and address the issue.
Alerts when a payment is about to be missed
Since customers often lead busy lives, we tend to be proactive by sending SMS messages as a helpful reminder that their bill's due.
Support in times of difficulty
Due to our prudent lending decisions, most of our customers have a relatively low risk of defaulting. However, we're there to guide them should they have any concerns:
In turbulent economic times
At the start of the recent economic downturn, we froze interest rates for all our customers for three months, and even cut some rates.
In times of personal upheaval
We've set up a helpline in the UK to offer advice to customers who are concerned about managing their borrowing with Barclaycard. On average, the majority of people who call the helpline have their problems resolved after just one call.
Consumer advice groups we work with in the UK include Money Advice Trust, Citizens Advice, Consumer Credit Counselling Service (CCCS), National Debt Line and Pay Plan.
In the event that payments are missed
Most of our customers tend to struggle financially due to reasons beyond their control. Unemployment, long term illness, bereavement or the extra financial cost of starting a family could all lead to financial distress and missed payments.
We deal with such cases sympathetically and offer care and support to help customers through this difficult period, by making sure that:
- All our collections staff are courteous and professional
- A strict timetable is followed to ensure that customers aren't contacted too frequently
- All calls are recorded and randomly selected for monthly review by a Quality Monitoring Team