What to Do If You Are Refused Credit
If you have applied for credit and have been turned down, there are a number of steps you need to take.
Reconsider Your Need to Borrow
If you have experienced debt problems recently or have had trouble making payments in the past, your credit score will be low and lenders will regard you as high risk. If this is the reason as to why you have been refused credit, then the best thing for you to do would be to seek advice from a debt charity, such as the Consumer Credit Counselling Service. However, remember that you should NEVER pay for debt counselling.
Check Your Credit File
If you can’t think of a reason why you have been refused credit, your first task should be to check your credit report. There are three major credit reference agencies in the UK – Experian, Equifax and Callcredit – who keep records on all your bank accounts, credit cards, previous loans and debt history.
Start by asking each agency for a copy of your file, each of them is likely to hold slightly different information about your financial history.
You can order a paper version for as little as £2, or you have the option to subscribe to each of their online services, which are a little more expensive.
Once you have the reports, go through each of them and look for any errors. Even something small like the wrong flat number or postcode could mean that your credit record is being mixed up with someone else’s.
If the mistake is concerning an outstanding debt that you disagree with then you might have to take it up with the lender in question because the credit reference agency isn’t likely to change your record without confirmation that the debt has been paid off.
You also have the option to add your own comments to your report. So, for instance, if you had trouble paying off a debt and missed a few payments due t unemployment or illness, then you have the chance to explain it.
Do Your Research Before Asking for a Loan
It is worth having a look at a lender’s criteria for lending before you apply to them. Some lenders have a policy of never lending to those with a CCJ, whereas others do lend to default borrowers, but charge them more.
Curb Your Applications
Once you have decided what type of credit you need, don’t just start applying to every lender in the hope that one of them will say yes.
Each time you make an application a lender carries out a search of your credit history and leaves ‘footprints’ on your report which other lenders can see.
The problem with this is multiple searches indicate multiple refusals to other lenders and this will harm your credit score.
