What to Do if You Are Refused Credit
Having your credit application rejected is both disappointing and may affect plans you’ve made, and is especially frustrating when you don’t understand why your application was declined. However, there are things you can do if you are refused credit - find out…
How to Handle a Credit Application Rejection
Any form of credit application is subject to the terms, conditions and requirements of a credit lender - meaning your application could be rejected. Applications for credit may even be rejected despite a ‘good’ credit score or rating and could have been declined due to another factor. Here’s what you should do if you are refused credit.
Find Out from the Lender Why Your Application was Rejected
If your application was rejected, lenders usually provide a reason behind their decision. However, if no reason is given, you can contact them yourself and enquire. Lenders usually have predetermined conditions and criteria which you are required to meet before they provide credit. Some reasons your application could be rejected include:
- - a lender’s specific requirements; using a platform like credit brokers to apply for credit provides the ease of having one application sent through to many lenders, and can result in one or more lender approving your application while another may reject it - this is becauseeach lender has their own set of requirements as credit criteria may differ from lender to lender
- - short credit history; if you have not had credit in your name for long, lenders may reject your application due to not having a substantial credit history
- - your credit profile indicates a history of late or bad repayments
- - you are part of a debt management plan that indicates you are in too much debt or that you struggle with debt repayments
- - you are financially associated with someone with a bad credit rating, like your wife or husband
- - you do not earn enough to afford the amount of credit you are applying for
- - you have made multiple credit applications in a short amount of time; this negatively impacts your credit profile and may be a red flag to lenders
- - application issues like mistakes, missing information, incorrect information, etc.
Review Your Credit Profile
Numerous websites and organisations offer a credit profile facility that allows you to view your own credit rating. Sites like ClearScore even make helpful suggestions on how to improve your credit rating. Creating a profile on a site like this will provide you with monthly updates on how your credit rating is performing, how much debt you currently have and even provides a list of lenders who may be able to provide you with credit.
Don’t Apply for Credit Again
Applying for credit again will not change the outcome of your application - in fact, it may delay the chances of having your credit application approved! Instead, find out why your application was declined and focus on any elements of your credit profile which may need improvement.
Improve Your Credit History
If your application was rejected because your credit history is too short, it may be worthwhile to open smaller credit accounts like a mobile contract or clothing account. The criteria for these types of credit are often less harsh than major credit facilities like overdrafts and credit cards and will help you build a positive credit profile. After several months of repaying these accounts (on time!), you can look into applying for the credit facility you originally wanted.
Ensure Your Credit Information is Current
Sometimes it is possible that the credit information a lender is using to assess your application is outdated. Platforms like ClearScore can provide you with an indication of this, and you may be able to manually update your details so as to improve your chances when next you apply.