Why did Barclays cancel my unused overdraft?

Barclays recently sent me a letter telling me they would revoke my agreed overdraft unless I told you otherwise as I haven't used it for 12 months. I informed them that I wanted to keep it for peace of mind, but a call center agent told me that the decision could not be reversed and that an unused overdraft would negatively affect my credit rating. This £300 overdraft limit has been in place since 2008 when I was earning minimum wage and has never been used once. During this time my income increased and I was approved for a mortgage and various loans and credit cards. So is having an unused overdraft really hurting my creditworthiness?ES, Surbiton, Surrey

You wouldn't think so, and credit reference agency Experian has confirmed that it does not include overdrafts in its credit assessment process. The personal finance advice websites I looked at only mentioned the risks of maxing out an overdraft. However, Barclays told me that it annually reviews overdrafts arranged by customers and plans to remove any that have remained unused. Why? Because, while an unused overdraft doesn't actually affect a credit score, it can be detrimental to an "affordability check" which, to the uninitiated, sounds pretty much the same. /p>

Both a credit score and a financial capability check are used to assess a credit application. While a credit score reflects the reliability with which an individual has handled credit arrangements in the past, a financial capability check examines their income and expenses, as well as the potential credit available, to assess whether they can afford to repay. It is therefore possible to have a good credit score and a bad affordability score. Lenders might be scared of a large overdraft limit, even if it is not used, in case the customer decides to take advantage of it and stretch financially. From what you told me, your limit is very small, so unless your personal finances recently took a hit, I'm surprised it had to be removed.

Barclays says you can appeal, provided you show that you are in good financial condition. He says: 'It's important to manage an overdraft like any other debt, and we have a duty of care to try to prevent customers' limits from going beyond what they can afford. "If customers believe they are able to afford their current limit, they will need to provide us with additional information to confirm their income and expenses, so that we can meet our requirements as a responsible lender."

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