Whenever you are applying for credit the lender is always assessing the risks involved with lending to you. Having a good credit rating demonstrates to potential lenders that you can be trusted and are in control of your finances. In this guide I take a look at why you might have been refused credit.
A mistake on the Application Form
You should take extra care when completing the application form. If you can’t remember how long you have lived at your address for, try to find out exactly when you moved in. Incorrect or false information could lead to delays with your application being processed, and in some cases could cause the lender to refuse your application.
If you find that you have made a mistake on your application form, contact the lender and see if they will correct it and allow you to resubmit the application.
Too many applications for credit in a short space of time
If you are making a large number of applications for credit within a short space of time, this can look bad to a potential lender. Whilst the lender cannot see the outcome of these applications, it is possible they can guess based on whether any new accounts have appeared on your credit file. Multiple searches in a short space of time could be seen as someone in financial difficulties or even fraud.
If you are declined credit but are not sure why, you should get a copy of your credit report to investigate further. That way you can sure the information it contains is in fact correct and if not, take steps to get it corrected.
You don’t fit the lenders profile
A lender will have a certain type of customer in mind. It might be that based on the information on your credit report and the application itself, the lender doesn’t feel you are a good fit for their product. Whilst one lender may decline you, another may be more than happy to help you. A lender should be able to tell you if this is the reason why you have been declined, for example if the decision to refuse your application was due to affordability.
The Information on your Credit Report
Your credit report contains details of accounts you have held in the last six years. It provides information about your payment performance, for example if you have been late making payments, and defaults or even County Court Judgments for example. So if there is any adverse data on your credit report, this could also be a reason why you have been refused credit.
As mentioned earlier on in this guide, it is definitely worth checking your credit report to make sure that the information it contains is accurate.
The Lenders Decision
When a lender refuses your application for credit only they know they reason why. It could be down to a number of reasons including adverse data on your report, you not being their target customer and information on your application form to name but a few.
You can ask the lender why they have refused your application and they will tell you the main reason why. That way you can act upon the information they provide to try and put things right. If it is due to adverse data for example then you might want to check what types of data are recorded on your credit report.
If the lender declined you due to affordability then perhaps you should consider getting some debt advice? If you are currently struggling to pay back your debts and are using credit to make ends meet, then you should really be looking for a longer term solution. The debt advice page has links to various organisations who can help you with your debts. Don’t leave it too late and make things worse for yourself. Good luck.