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Being refused credit is a horrible feeling. Not only does it leave you feeling rejected, but when you’re looking to borrow money that you really need, it can leave you feeling helpless.
However, there are things that you can do after you’ve been rejected to prevent your chances of it happening again.
Step One: If you’re refused credit, don’t panic (and don’t give up hope)
Once you’ve been refused credit, it’s very tempting to apply for another loan or credit card straight away. Don’t.
Not only does being rejected affect your credit rating, but it shows up on your credit record. When a lender sees that somebody is applying for (and getting refused) lots of credit, it signals danger. As a rule, people only apply for lots of different sources of credit in two situations: when they’re in financial trouble or when they’re anticipating financial difficulties. Both aren’t suitable candidates to lend money to.
But don’t give up hope – there are some options available to you. Perhaps you applied for the wrong type of loan, perhaps there was a mistake or perhaps you just didn’t meet the right criteria. Whatever the reasons, there are bound to be lots more options to help you get the money you need.
Step Two: Get clued up
Once you’ve got over the initial rejection, it’s time to get up to date with the facts.
If you’ve been turned down for a credit card or a loan, you should be told whether you were refused credit as a result of a search on your credit file. If this is the case, you should also be told which credit agency they used. (You might also be able to get a more detailed answer from them, but they’re not obliged to give you this.)
If you think there has been a mistake, make sure you’ve evidence to support your case and present it to them. You can then put your application into dispute.
(At the same time, make sure that you’ve checked your credit score with all three agencies. If you’re unsure how to do this for free, check out our handy guide.)
Step Three: Consider your options (and why you’re looking for credit)
Now, this is where things get a little trickier. The key at this stage is to make sure you know why you were refused credit, what you’re looking for credit for and how you’re going to go about getting it.
If you were refused credit because your credit score wasn’t good enough – perhaps it’s time to consider a loan specifically for those with bad credit. (Hint, hint: guarantor loans are a pretty safe option – you’re much more likely to be accepted for these, even if you’ve got bad credit. Oh, and did we mention that we do them?)
If you were looking for credit to consolidate all of your debt, however, you might want to consider seeking financial advice. (If you’re interested in free financial advice, you can find a comprehensive list of organisations that offer that at the Money Advice Service website.)
Step Four: Regroup, repair and reapply
Once you’ve sat done, worked out the reasons you were refused credit and have a clear picture of your credit score – it’s time to start the next stage of the journey: the journey towards being accepted for credit.
First of all, take care of all of the little things that are affecting your credit score. Maybe take a few months (if you don’t need the credit urgently) to make sure you pay your direct debits on time. Make sure you’re on the electoral register. Make sure you’ve closed any credit accounts you aren’t using.
- Author Jack Barclay
- Posted 16 February 2017