Find out what to do if you’ve been rejected for credit
If you’ve been rejected for credit, don’t do anything else until you’ve read this!
If you’ve had a credit application turned down, stop! Don’t apply for any more credit just yet.
Yes, really. Each time you apply for credit, the lender may be doing a search on your credit report. And this search leaves a black mark. So, if you apply again and get rejected, that means you have two marks, then three, four and so on.
And these marks are a warning sign for lenders as it can make it look like you’re desperate for credit and not really bothered where it comes from. And no one likes desperation!
Remember that kid at school who used to go around asking all the girls out, but never got a date? That’s because he wasn’t fussed about who his date was, he just wanted one! Maybe if he was a bit pickier and thought about it a bit more, he’d have been successful. Desperation is not cool.
So, like we said – stop applying! For now anyway.
How much is too much?
Experian, one of the credit reference agencies, says that one application in a three month period should make little or no difference to your credit report.
This is a good general rule to go by and shows that if you’ve just applied and been rejected, it’s in your own best interest not to apply for any more just yet.
So what should I do instead?
Take a look at your credit report. That might hold the key to why you were rejected. You can check it for free with Noddle, ClearScore or CreditMatcher. You should:
- Check for mistakes
Check that your report is up to date with your most recent name and address and also confirm that everything looks as it should.
If there’s a mistake on it, such as a missed payment that you definitely remember paying, or your address is misspelt – get it fixed. That could be the reason why you’ve been rejected. Find out more here.
- Check your financial associations
If you’ve had a joint credit agreement with someone in the past 6 years, you’ll be ‘financially associated’. This means lenders will see their name when they check your credit report. If that person has poor credit, it could affect the lenders’ decision, so you don’t really want to be financially linked to them.
Likewise, if an ex-partner or an old housemate is on your report, it’s a good idea to remove them too.
As long as you no longer have any joint credit agreements, you can close the account down and ask the credit reference agencies for a ‘notice of disassociation’. If you do still share the debt, you’ll have to pay it off before you can close the account down. You can read more about this here.
- Check your repayments
Check your payment history and make sure it’s all in order. If there’s a mistake, like a payment you remember making showing as a missed one, get in touch with the lender to dispute it.
A missed payment will stay on your credit report for six years and may make you look riskier to lend to, so if one’s on there when it shouldn’t, it could be impacting you getting accepted.
There are other things you can do to improve your credit report, check them out.
Check your eligibility before you apply
Once you’ve spent some time making sure your credit report is looking as good as it can be, you can start looking at your credit options again.
However, going back to our point about the desperate kid at school, make sure you’re picky with which credit products you apply for. Think about it carefully and don’t just go on an application spree. Remember, those black marks on your report might come back to haunt you!
Instead, a lot of lenders now let you check if you’ll be accepted for a credit product before you apply, without impacting your credit rating.
Look out for eligibility checkers – it’s usually pretty clear on the lenders’ website whether you can check before you apply or not.
These don’t do a full application – they run a soft search on your credit report instead, which only you’ll be able to see. That means it doesn’t have an impact on your credit rating at all.
Then, if you get a yes, you can go on and apply with confidence. Or, if you get a no, you can save your credit report from any more of those black marks we were talking about earlier.
Disclaimer: All information and links are correct at the time of publishing.