Egg, the internet bank, threw out a customer simply because he had previously lost his credit card, according to a leaked e-mail.

The bank, owned by America’s Citibank, caused uproar earlier this month when it announced it would cancel the cards of 161,000 “risky” customers. But many insisted they paid their bills in full every month, raising accusations they were dropped because they don’t make Egg enough money.

The leaked e-mail reveals the real reasons why some customers were thrown out. In many cases they will seem entirely spurious – from the customer who lost his card to the one who used hers “too much”.

It will alarm millions of “prudent” borrowers who may find themselves in the same boat, since there are signs card firms such as Coop and Goldfish are following Egg’s lead.

Dennis Walder, 65, a Sunday Times reader from north London, lost his Egg credit card on the Paris Metro last summer. He immediately cancelled it and was issued with a new card. This month he was told his card would be cancelled. Walder, a professor for the Open University, said: “This is simply ridiculous. I’m sure many people have their cards stolen but to think this will classify you as a greater risk is simply absurd.”

However, the leaked e-mail confirms that the loss was the only reason Walder had his card cancelled. The move is doubly worrying because credit-reference agencies do not change your score if you report a card as stolen, suggesting banks are turning to sneaky methods to weed out prudent customers.

James Jones of Experian, a credit-reference agency, said: “If it is reported as soon as possible, the card will be classified as cancelled and any balance will be transferred to the replacement card. There will be no change to your credit score.

“Having said that, lenders are really tightening up their procedures and anything that classifies you as a greater risk – even if it is something we all do, like losing our card – could count against you. I wouldn’t be surprised if more firms take a tough line.”

The leaked e-mail shows that “payment behaviour changes” and even “increased card use” could also affect Egg credit scores.

Egg said: “We accept that not all of the individuals in the review may be high risk or will default, but the probability is higher than we wished to accept against our internal benchmarks.”

We look at some of the other spurious reasons lenders use to get tough with customers.

Making a large purchase

Malcolm Swallow, an accountant from east London, had his credit limit reduced from £10,000 to £3,100 by Cooperative Bank.

Although he usually pays off his balance in full and always on time, his limit was slashed after he put £2,800 on his card last December to purchase stock for his accountancy firm. Six days later, he was sent a letter by the Coop stating his limit had been reduced to “ensure that customers do not borrow more than they can afford”.

Swallow, 51, said: “I am a good customer and I have never reached anything close to my limit in the five years that I’ve had the card. In fact I’ve had an Egg card for the past few years and that wasn’t cancelled.” The Coop denied reducing the credit limit because of the large purchase and has agreed to review his case.

Not using up to your limit

A Goldfish Morgan Stanley customer, who asked not to be named, recently had his limit slashed from £8,000 to £500 within three months. He said he had never missed a card payment and was a good, low-risk customer.

In July 2006, his limit had gone up from £5,000 to £6,400 – though he had not asked for an increase. By April last year, it had risen to £7,200 and by last October was £8,000.

With the onset of the credit crunch, however, his limit was reduced, without warning, to £2,400 in November. By December it had gone down to £1,900 and now it stands at £500. Goldfish is being sold by its American owner, Discover Financial Services, to Barclays for £35m – £828m less than it bought it for two years ago.

It said: “We regularly review the credit limits of our customers by assessing a number of factors, including current and previous account behaviour and information gathered from credit-reference agencies.”

Using your card too much

Moya Lucas, 23, a life insurance adviser from Chester, had her Egg card cancelled because she “highly utilises” the card, according to the leaked Egg e-mail. She has never missed a payment and has a direct debit to pay off the minimum every month. She has used the card to withdraw cash a couple of times.

Withdrawing cash – even in an emergency

If you take out cash with your credit card, you will often be charged a fee. This is regarded by many lenders as showing risky behaviour. However, some customers have no choice.

Kelly Roberts, 32, a police community support officer from Cheshire, had her Egg card cancelled because of “higher than normal cash usage”. She said she only withdraws cash while on holiday or in emergencies.

She also had “erratic payment patterns”, according to Egg.

HOW TO BEAT THEM AT THEIR GAME

— Make sure you are on the electoral roll at your current address. If you have recently moved, register online at rollingregistration.co.uk, or contact your local authority.

— Check your file using credit reference agencies such as Experian or Equifax (they charge £2 for a search) to make sure all cards you no longer use have been marked as ‘settled’.

— Don’t keep applying for credit unless you need to. Many firms take the number of searches made on your credit file into consideration.

— If you disagree with something on your credit report, you can add a statement of up to 200 words.