Missed out on credit? Try this repair job

By Iona Bain
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Have you been turned down for a loan? Finding out the reason, then planning your next attempt, is the key to success.

Don’t be fooled by the glossy lifestyle adverts. Borrowing in order to spend money, or repay another debt, has never been a human right for everyone.  Any time you apply for credit, you are screened and checked and tested. You might not pass.  So what can you do if your application fails?

The decision

Don’t take it personally when the computer says no. If a lender turns you down, ask them why. Lenders are required to provide you with an explanation, but if it isn’t in the rejection letter, you can ask for it. Then you can take action. It might be because you are not on the electoral roll, so that should be easy to fix. You may simply not be the sort of customer this lender wants – you earn too little or too much for their ideal profile. Better to check this beforehand on their website. Or there might be other reasons.

The form

Fill out your form carefully. Guessing at things like how long you have lived at your current address won’t do.  Providing wrong information will at best hold up your case and at worst be viewed as fraud.  If a mistake is the reason, ask the lender if you can correct and try again.

The footprint

It may seem like shopping around, but every time you inquire about a loan your card is marked. Regardless of whether you are accepted each time or not, making a string of requests for credit gives lenders the impression you might be desperate.  The answer is to only apply to the most likely sources, space out any applications, and always investigate a credit refusal before embarking on the next attempt.  Many lenders now offer a ‘no footprint’ search to enable you to make a request without being screened. Want to know the most common reasons why people get rejected when applying for a credit card, loan or mortgage? Here's the article for you.

The report

If you have been knocked back because your credit report has alarmed the lender, start taking action. You can request to see your report free at CallCredit and by signing up for a free trial at the other two agencies Experian and Equifax. Make sure they’re complete, up-to-date and accurate. You can ask for incorrect information to be changed or removed and add a notice to explain any special circumstances.

The repair job

Perhaps you have a collection of credit cards, with lots of headroom up to your credit limit. That could be frowned on – what if you get a new card, then start maxing out on the old ones?  Or are you being unrealistic in how much you want relative to your income?  Or perhaps you want the new loan to pay off the old ones ....but the lender can’t be sure that is what you would actually do.  There are fixes for all of these. You could ask your current lenders to bring down your credit limit.  When you re-apply, with your profile updated this will reassure a new lender that you do not have a lot of unused credit.

Consider going for a smaller loan. Use it to refinance only your high-interest debts at a lower rate, and try to keep up the payments on the lower-interest stuff.

There are a handful of cards and companies that claim to rebuild your credit history, and eventually improve your credit rating. To know more about theres credit rebuilding products, read this article.

The resolution

Try to up your game. Be a canny borrower, stay within your agreed limits, meet your payments deadline every month.  Check your credit report regularly by performing a soft online search, query anything inaccurate in it, use it as a guide to planning better financial health. Better still, discover budgeting, where you review where the money actually goes, write it all down, and set limits for each area.  Make sure you are not being negatively affected by having applied jointly with a partner at any point.  Finally, only borrow when you really need to.  But if you feel really hemmed in, look for help and advice.

Top takeaway

If you plan properly, and take your time, you can bounce back from a failed application and land the credit you need.

 

By Iona Bain

Iona is the author of Spare Change, an inspiring, down-to-earth handbook for the compulsive spender, budget-phobe or anyone that just wants to improve their financial savviness. She writes regularly for the Times and Herald newspapers and has also appeared in the Telegraph, Independent and Daily Mail. When not writing, Iona loves writing and playing music - her songs can be heard at soundcloud.com/ionabain.

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