My credit report is fine. I’ve never missed a payment. I don’t even have a credit card! Why were you rejected for credit then?
Being rejected for credit is annoying – especially because you aren’t given a reason why.
It’s up to the lender to decide whether to accept you or not – and unfortunately there are no set rules when it comes to how they decide, because each has their own lending criteria.
To help you try to understand a bit more, we’ve put together some of the most common reasons why you may have been rejected:
- You’ve missed a payment or made a late payment
Missed, late or partial payments show up on your credit report for six years. Lenders want to know that you’ll repay them what you owe on time each month, so missed payments in the past may mean they think twice about lending to you.
- You may not fit the lenders’ criteria
Each lender has their own rules about who they will lend to. Some will have a minimum salary, others may not lend to tenants or to people with poor credit scores. Just because you don’t meet the rules one lender sets doesn’t mean others won’t accept you.
- You can’t afford to borrow the money
When you apply to borrow lenders must be responsible about deciding if they will lend to you. This includes assessing whether you can afford the repayments. If you have a take home pay of £1,000 a month and apply for a loan with £500 repayments, its quite likely that many lenders will say that repayment is likely to be unaffordable, for example.
- You’ve applied too many times
Each time you apply for credit, whether you’re accepted or rejected, a mark is usually left on your credit report. Lots of these marks can put lenders off as it can look like you’re desperate for cash.
- There are mistakes on your credit report
If your name or address history are incorrect, it could mean you get a no. Lenders use your credit rating to make sure you are who you say you are, so everything needs to matchup.
- You have a ‘thin’ credit file
If you’ve never borrowed before, you will have a ‘thin’ credit file, which means that lenders can’t see how you’ve borrowed in the past so they can’t predict how you’ll behave in the future. There are lenders that specialise in helping build their credit history, so don’t despair.
If you have been rejected for credit, it’s a good idea to check your credit report to see if any of the above jump out at you. You can then work on improving it before you apply again. Read our top tips on how to go about this here. Good luck!
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Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.