Applied for a few different credit cards recently and been rejected for all of them? Well, there’s one thing you should definitely do right away.
Stop applying. At least for a bit, anyway.
What do you mean, stop applying?
Ever been in a new relationship with someone who’s just a bit too keen? Constantly calling or texting you, wanting to see you all of the time, liking every single photo you’ve ever uploaded to Facebook. It can sometimes come across a bit desperate, don’t you think?
When it comes to applying for credit, it’s kind of the same thing.
You apply for credit. You’re rejected. You apply for a different product. Rejected. Oh, what about this one. Rejected. I’ll just try one more. Rejected.
Sound familiar? To lenders, this screams desperation.
In fact, one of the worst things you can do if you’re rejected once is to fire off loads more applications.
Constantly applying can make you look like you don’t really care where you get it from, you just want the money, even if you’re just shopping around for the best deal.
Why’s it a problem?
Each time you apply, the prospective lender will search your credit report. This search leaves a mark, which can be seen by other lenders looking at your report.
Think of it like that new clingy partner. You tell them to chill out, but they don’t. Strike one. You ask them again, but they carry on pestering you 24/7. Strike two. Then they ask when you’re going to move in together. Strike three. Dumped.
Why so keen, you’ve only been together a month?
The same applies to credit applications. If there are lots of strikes (searches is the official term) on your credit report within a short period of time, lenders may ask themselves why you’re so keen for cash. As a result, you may look risky to them and they may not want to lend to you.
How many applications is too many?
Experian, one of the credit reference agencies, say that you can make one credit application within a three month period with little or no impact to your credit report.
This may vary with the different credit reference agencies, but it’s a good general rule to go by. So, if you’ve recently applied and been rejected, don’t apply for anymore just yet.
What should I do instead?
There are a number of reasons why you may have been rejected, but the most common is that your credit rating isn’t up to scratch.
So work on improving your credit rating in the meantime. Here are a few tips to help you out:
- First, check your credit report for free through one of the links below
If your personal details aren’t up to date on your credit report, there’s a CCJ on there that you settled on time, a missed payment that you don’t recognise or it shows an account that you don’t have, get it fixed as soon as you can.
Find out how to do this here. And you can read more tips on how to improve your credit report here.
- Check your eligibility before you apply
A lot of lenders now let you see if you’ll be accepted for credit before you apply, without impacting your credit report.
How does it work?
Lenders do a quick pre-check of your application with the credit reference agencies. This is a ‘soft’ search, which, unlike a ‘hard’ search, will be invisible to anyone but you.
If you get a yes, brilliant, you can go on and apply with confidence.
If you get a no, you can try checking your eligibility on another product, or wait a few more months, work on that credit report and try again.
Now, we wonder when they’ll invent a pre-checker to see if a new partner is going to turn out to be clingier than a koala?
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Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.