What You Should Do If You Have Been Refused Credit

Being refused credit can be so annoyingly frustrating, trust me I’ve been there when I was told I needed credit to be taken seriously for a mortgage.

Regardless of who Experian, at the time, were recommending, I was having no luck whatsoever in getting anyone to accept me.

Little did I know then, there were ways in which I could have increased my chances.

The truth is you can be refused credit on any credit application you make, whether that’s a loan, a credit card or even a mobile phone contract.

When you think you are creditworthy, it’s difficult to comprehend why we are seen as a higher risk than others, but it’s important to know that being refused credit doesn’t harm your credit score itself.

Your credit report will show that you have applied for credit, however other potential lenders won’t be able to see you were refused.

The truth is the lender always decides whether to refuse or accept your application and if you’ve been turned down only that lender can tell you why, as only they really know the main reason.

This is useful information as can help you identify actions you could take to address the situation.

The problem is, not many people actually ask.

Why would I have I been refused credit?

There are some common reasons why people get turned down for credit:

  • You have a poor credit history containing late payments, missed payments, defaults or County Court Judgments (CCJs)
  • You’ve made lots of credit applications in a short space of time
  • You made a mistake on your credit application. For example, you’ve listed your address as 180 Manchester Road, when your address is Flat 1, 180 Manchester Road
  • There is a mistake on your personal details in your credit file. For example, your name is spelled wrong on the electoral roll
  • You don’t fit the criteria the company is looking for. For instance, some lenders target high earners, some target low income earners

What can I do to increase my chances of being accepted for credit?

  • Where possible limit the amount of credit applications you make over a short period of time
  • Get yourself on the electoral roll as a matter of urgency
  • Use a credit reference agency to check that your personal information is up to date and accurate
  • Make sure your financial associations are correct (i.e. a bill you know you’ve paid but is showing as unpaid)
  • Attempt to build up your credit history and credit score with smaller forms of credit like a low limit credit card
  • Research which information lenders use

Final word

There are ways you can build a great credit file which will make you appear more credit worthy to potential lenders, which you can find in one of my recent articles ‘How to build a credit file worthy enough for a set of bankers’ .

Also, check out ’20 no fuss ways to build your credit rating’ and ‘How to be a pro at first time credit applications’. 

Thinking Thrifty

Thinking Thrifty

David Naylor is the editor of the Thinking Thrifty blog. An award winning personal finance and lifestyle blogger, he shows how it is possible to live extremely well for less.
Thinking Thrifty
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