Being declined when applying for a loan, credit card, mortgage, or bank account is explained by credit reports
Declined a loan, mortgage, or credit card - this is why
Thursday, 24 Aug 2006 12:34
Getting declined when applying for a loan, credit card, mortgage, or bank account can be a humiliating experience - but it need not be unexpected.
The problem is that millions of Britons are simply unaware of their credit score or what is in their credit report - the two things that banks and building societies use when they decide whether to offer you a loan or not.
While everyone has the right to look at their own report - and even challenge its content - very few people do. Even though they can get access to it for free.
Experian,
Equifax, and
MyCallcredit are among the biggest credit rating agencies in the UK.
And as well as whether to offer you a loan in the first place, credit scores are also used to decide on the interest rate you pay - with people with a worse credit history more likely to be charged more when borrowing.
However, a staggering 95 per cent of Britons have never checked their report, research from CreditExpert reveals.
And this is despite two people in three having debts, and one person in eight admitting to problems with debts.
To try and ensure no one is penalised unfairly, and to help people declined loans CreditExpert has produced the following tips:
How to improve your credit score
1.
Love your credit report
Make sure it is up to date and accurately reflects your circumstances, as your credit report is crucial when a lender is deciding on whether to make you an offer.
2. Set the record straight
Check that nothing needs updating on your credit report or is incorrect or needs explaining – for example, if you missed a repayment due to illness rather than an inability to pay.
3. Protect your identity
Check your report regularly to make sure you have not been a victim of identity fraud, which can impact your credit score.
4. Assert your independence
Your credit report lists anybody with whom you have a joint account – your financial associate. If they have a poor credit record, your application could be refused, so it is important to update your credit report if you no longer have joint finances with an ex-partner.
5. Don't leave footprints
If you are shopping around for credit, ask companies for a quotation before making a formal application for credit when they will search your credit record – because every search is recorded on your credit report. If you make too many applications, lenders may think that you are desperate for money, over-extended or even that identity fraud is taking place.
6. Do not lie on an application form
Lenders usually find out and any inaccuracies on your application will tell against you and cause difficulties in future applications for credit.
7. Do not let debts pile up
Making repayments on time shows lenders you are in control and more likely to meet future repayments. Talk to your lenders if you are having difficulties. You should be able to agree a schedule of payments you can afford.
8. Avoid credit repair companies
These are not credit reference agencies and do not have the authority to amend your credit report. Do not be tricked into paying for services you do not need or that you can get elsewhere for free.
9. Check your National Credit Score
This will give you an idea of how a lender will view the information on your credit report. In general, a higher score means you will find it easier to get the money you need. A poor score can result in a refusal or might adversely affect the terms you are offered. For example, it can mean that you pay a higher rate of interest.
10. Keep on checking
Your credit report is not frozen in time. Check your report regularly to ensure it is accurate. That way, you can ensure there are no nasty surprises the next time you approach a lender.