Have you been refused credit recently?

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Being refused credit can be frustrating – but it can happen on any credit application you make, be it a credit card, loan, or new mobile phone contract. Not getting credit can be really inconvenient and affect your best-laid plans.

The situation can be made worse by not knowing exactly why a lender has turned you down, or if there is any action you could take. After all, you may think you’re creditworthy and not understand why you have been refused.

How does a lender decide to accept or refuse my application?

When you apply for credit from a lender, they’ll want to understand the likelihood of you repaying them. To do this, they look at your Data Self. This is a version of you that’s made up of your credit history and other information, including your accounts, repayments and debt.

Lenders can learn about your Data Self by looking at your credit report and application form. They may also use any information they already hold on you (for example, if you’re an existing customer).

It’s always the lender’s decision to accept or refuse your application. If you’ve been turned down, only the lender can tell you why because only they know. If you ask, they should be able to give you the main reason. This is useful because it might identify actions you can take to improve your credit history.

Being refused for credit doesn’t damage your credit score – your credit report will show you applied for credit, but not that you were refused. However, if you go on to make further applications over a short period of time, this will dent your score. This is because lenders don’t like to see multiple applications in your recent credit history, as it can suggest you’re in financial difficulty.

Why have I been turned down for credit?

Here are some of the most common reasons why people get turned down for credit:

1. Your credit history could have late or missed payments, defaults or county court judgements

2. You’ve made multiple credit applications in a short space of time

3. There was a mistake on your application form. For example, if you live in a flat, your address may need to be written - “Flat A, 125 High Street” and not “125A High Street”

4. You may not be their target customer for example some lenders want to lend to those with high or low incomes

How can you increase your chances of being accepted for credit?

1. Try not to make too many applications if you can

2. Get on the electoral roll if you’re not already on it

3. Check your information is up to date and accurate

4. Make sure your financial associations are correct

5. You could start to build up your credit history with smaller forms of credit

6. You could check your Experian Credit Report so you can see the information lenders use

Get to know your Data Self – check your score with a free Experian account.

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